What is the ruling regarding a believer who is struggling financially, but needs to buy a home for family reasons only because his parents house is becoming overcrowded due to himself, his brothers and sisters and their spouses living there? Is it permissible for him to take a loan out from the bank?

Al-jawaab billaahi at-taufeeq (the answer with Allah Taa’la's guidance)

Under no circumstance must a person take loan from a bank and pay interest on it. In doing so, he will only struggle further! He should try the council or Housing Agency. You may find some Ulama who will allow Riba because we live in Dar ul Harb, but, this, too, has NOT been accepted by the majority. For further details, I would suggest you read ‘Kashf-al-Dujah’ which is published in the 3rd volume of Imdad-ul-Fatawa by Hadhrat Maulana Zaffar Ahmad Uthmani.

(VERILY, ALLAH TAA’LA IS ALL-KNOWING!)