How to Get a Mortgage in Israel: What No One Tells You

What is a Mortgage in Israel (Mashkanta) and How Does It Work?

In Hebrew, a mortgage is called a mashkanta. But the similarity to what you know at home ends there.

In most countries, you take out one loan at one interest rate. In Israel, your mortgage is made up of several smaller loans bundled together each with its own interest rate, term, and structure. This bundle is called a tamhil. One piece might be variable and tied to the Bank of Israel's prime rate. Another might be fixed and inflation-linked. A third might be a foreign currency track in USD or EUR.

This is not complicated for complication's sake. Each track carries different risk, and combining them protects you if one component moves against you. Think of it as diversifying your exposure, not just taking a loan.

Two other differences worth knowing immediately: there is no mortgage interest deduction in Israel (unlike the US), and the bank lends based on the appraised value of the property not the purchase price. If you agree to pay 2 million NIS for an apartment but the bank appraises it at 1.8 million, the bank only lends against the lower number. That gap is yours to cover.

Who Can Get a Mortgage in Israel?

Almost anyone can apply Israeli citizens, Olim Hadashim (new immigrants), and foreign nationals. The main differences come down to how much you can borrow and at what terms.

Income also matters significantly. The Bank of Israel caps your monthly repayment at 40% of your net household income. No Israeli bank can approve you beyond that ratio, regardless of your assets.

Age is a factor too. You must repay the full mortgage by age 80–85, depending on the bank. If you are in your 50s and applying for a 30-year mortgage, the bank will shorten the term accordingly which means higher monthly payments.

The team at NativeIsrael regularly connects buyers with trusted mortgage advisors in Israel who can give you a realistic picture of your borrowing capacity before you start property hunting in earnest.

What Are the Different Mortgage Track Options in Israel?

This is where the real decision-making happens. You will need to combine at least three tracks to build a compliant tamhil. Here is what each one means.

1. Prime-Linked (Variable)

The most popular track. Your rate moves when the Bank of Israel's policy rate moves currently around prime + 1.5%. You can repay it at any time without a penalty. The downside: if the prime rate spikes, your payment goes with it. Capped at two-thirds of your total loan.

2. CPI-Linked Fixed Rate (Madad)

Your interest rate is fixed, but the loan principal adjusts with inflation. Good in low-inflation environments, nerve-wracking in high ones.

3. Unlinked Fixed Rate

Fully predictable monthly payments with no inflation linkage. You pay a higher starting rate for that certainty, and penalties apply for early repayment outside the contract's exit windows.

4. Adjustable Rate (Fixed-to-Float)

Rate resets every five years or so, based on government bond benchmarks. Offers a lower initial rate than a long-term fixed, but introduces payment uncertainty at each reset point.

5. Foreign Currency Track (USD/EUR)

Linked to SOFR or Euribor depending on currency. If your income is in dollars or euros, this can act as a natural hedge. If not, it introduces significant currency risk.

How Much Can You Borrow and How Is LTV Calculated?

The single most misunderstood aspect of getting a mortgage in Israel: the bank bases the loan amount on the appraised value, not the contract price.

One client we worked with had agreed to pay 2.4 million NIS for an apartment in Tel Aviv. She had budgeted carefully for a 75% mortgage. The appraisal came in at 2.1 million. At 75%, that was 1.575 million in financing leaving her scrambling to find an extra 225,000 NIS she had not planned for. Always get an appraisal before finalising your budget.

Olim Hadashim have an additional advantage. The Ministry of Housing offers a subsidised Zakaut loan of up to approximately 200,000 NIS at a capped rate of around 3%. Check out our guide to aliyah benefits for the full breakdown of what new Olim are entitled to.

What Documents Do You Need to Apply for a Mortgage in Israel?

For Israeli Residents / Olim

• Israeli ID (Teudat Zehut)
• Last 3 months of pay stubs or income tax summary
• 3 months of bank statements
• Signed purchase contract (or draft)
• Credit score report

For Foreign Nationals / Buyers From Abroad

• Valid passport
• 2 years of overseas tax returns
• Foreign bank statements (3 months)
• Overseas credit report
• Power of Attorney if signing remotely

Getting a mortgage in Israel from abroad is entirely possible. The aliyah process guide on the NativeIsrael blog is also worth reading if you are planning the broader move.

What Is the Mortgage Approval Process in Israel: Step by Step?

Step 1: Get a Property Appraisal

Before anything else. Appraisals cost between 500 and 6,000 NIS depending on the property. Find an appraiser with recent experience in your target area.

Step 2: Apply for Ishur Ekroni (Approval in Principle)

This is your pre-approval. Valid for 45–90 days depending on the bank, with the interest rate locked for 24–32 days. Get this before finding a specific property it sets your real budget.

Step 3: Build Your Tamhil

Work with your mortgage broker to structure the track combination. This is the stage where professional advice pays for itself ten times over.

Step 4: Submit Final Documents

Once you have a signed purchase contract, the bank will want the full document package. Your broker coordinates this.

Step 5: Sign the Mortgage Agreement

Some banks now offer remote signing via video call. If you are overseas, a Power of Attorney allows your lawyer to sign on your behalf.

Step 6: Register the Lien (Tabu)

Your lawyer files the lien registration at the Tabu (Land Registry). This protects the bank's security and formalises ownership after funds transfer.

One family we worked with skipped the pre-approval step and signed a purchase contract first. When the bank's appraisal came in 300,000 NIS below purchase price, their financing structure collapsed and they had no exit clause. They had to scramble to find bridging funds within weeks. Lesson: get the Ishur Ekroni first, every time.

What Are the Costs and Fees Involved?

Purchase tax (mas rechisha) is a separate cost and varies significantly by buyer status. For more on the full cost picture, see our guide to living in Israel. Here are the core mortgage fees to budget for:

• File opening fee: 0.25% of loan (capped 360–6,000 NIS)
• Property appraisal: 500–6,000 NIS
• Legal fees: 0.5–1.5% + VAT
• Tabu and lien registration: ~300 NIS
• Life and property insurance: annual premium, mandatory
• Notary / Power of Attorney: ~200 NIS
• Mortgage broker fee: 5,000 NIS to 1% of loan

Do Olim Hadashim Get Special Mortgage Benefits?

Yes and many people do not claim them. Olim Hadashim are entitled to a subsidised Ministry of Housing Zakaut loan of up to around 200,000 NIS at a capped rate of approximately 3%. This loan sits alongside your standard bank mortgage.

Olim also qualify for the same 75% LTV as Israeli residents compared to just 50% for foreign nationals. There is also a purchase tax reduction available to new Olim on their first property. NativeIsrael works with advisors who help Olim make sure none of these benefits fall through the cracks.

Do You Need a Mortgage Broker in Israel?

Technically, no. Practically, almost always yes especially if you are buying from abroad or navigating this in a second language.

Israeli mortgage rates are not published transparently. There are over 50 different loan products spread across multiple banks, and the headline rate a bank quotes you is often not the best rate they can offer. Brokers know which banks are currently competitive for your profile and negotiate on your behalf.

Broker fees range from around 5,000 NIS for basic assistance to 1% of the total loan for comprehensive service. A broker can potentially save you tens or even hundreds of thousands of shekels over a 20–30 year mortgage. NativeIsrael works with a network of experienced English-speaking mortgage brokers and advisors across Israel.

Top Tips for Getting the Best Mortgage in Israel

• Get the Ishur Ekroni before you sign anything. Israeli contracts have no financing contingency. Approval first, contract second.
• Always get an appraisal early. The bank lends on appraised value, not purchase price. Know the gap before you commit.
• Use a mortgage broker. The Israeli market is opaque and negotiable. A good broker pays for themselves.
• Combine at least three tracks. Diversify your risk across variable, fixed, and inflation-linked components.
• Olim: apply for the Zakaut loan. It is a subsidised government loan you are entitled to do not leave it on the table.
• Compare at least two banks. Even with a broker, see what competing institutions offer before committing.

What Are the Biggest Mistakes to Avoid?

Signing the purchase contract before securing approval is the single biggest risk. You have no legal exit if financing falls through. Israeli law does not protect you the way a financing contingency clause would in the US or UK.

Assuming appraised value equals purchase price is the second. Budget for the gap especially in high-demand markets like Tel Aviv, Jerusalem, and Herzliya.

Going entirely variable on the prime track leaves you exposed to payment shock if the Bank of Israel tightens. The Bank of Israel mandates that at least one-third of your mortgage must be at a fixed rate for exactly this reason. And always compare at least two banks rates are negotiable and banks do not advertise their best terms upfront.

Conclusion

Getting a mortgage in Israel is genuinely different from anything you have done before but it is absolutely manageable when you know the rules. The key is preparation: understand the tamhil structure, get pre-approved before you start negotiating, know your LTV limits, and do not go it alone if you are buying from abroad.

Whether you are an Oleh settling in for the long term or an overseas investor entering the Israeli property market, NativeIsrael is here to connect you with the mortgage advisors, lawyers, and property experts who make the whole process smoother. Explore your options on our benefits of moving to Israel guide or reach out directly.