The Two Key Limits: LTV and Income
How much you can borrow on a משכנתא (Mashkanta) (Israeli mortgage) is controlled by two constraints set by the Bank of Israel: the loan-to-value ratio (LTV) and your income relative to the monthly payment.
What is the maximum LTV for a mortgage in Israel?
The Bank of Israel sets maximum LTV ratios depending on how many properties you own:
- First apartment (dirat megurim - primary residence): up to 75% LTV. You must contribute at least 25% as a down payment
- Second or additional property: maximum 50% LTV. You must bring 50% as equity
- Improving housing (replacing an existing apartment): up to 70% LTV in most cases
Example: To buy a 2,500,000 NIS apartment as your first home, you need at minimum 625,000 NIS (25%) as a down payment. The bank can lend up to 1,875,000 NIS.
How much income do you need to qualify for an Israeli mortgage?
Directive 329 sets a hard ceiling: a banking corporation may not approve a housing loan whose payment-to-income ratio exceeds 50%, and once the ratio passes 40% the loan must be assigned a 100% risk weight, which makes 40% the practical working ceiling at most banks.
Directive 329 also caps the variable-rate share of the loan at 66.66% and the final repayment period at 30 years, and banks apply their own affordability tests on top of those limits. Ask your banker in writing which rate the affordability calculation was run at.
Can you get a mortgage as an oleh without Israeli credit history?
New olim do not have an Israeli credit history. Banks in Israel use the Bank of Israel's credit registry and Dun & Bradstreet Israel data to assess creditworthiness. With no local history, banks rely more heavily on:
- Current income documentation - recent pay stubs (tlushei maskoret) or employer letter for employed olim; tax returns or accountant certification for self-employed
- Foreign credit reports - US olim can provide a US credit report; UK olim a credit report from Experian or Equifax UK. Some banks accept these as supporting evidence
- Bank statements - 3–6 months of statements showing regular income and responsible financial behavior
- Down payment source - documenting where your down payment comes from (foreign assets, savings, gift from family) provides comfort to lenders
The absence of Israeli credit history makes the process slightly more manual but does not prevent mortgage approval for olim with documented income and a sufficient down payment.
What down payment sources do Israeli banks accept from olim?
Where the down payment comes from matters to Israeli banks - they require documentation (source of funds declaration). Acceptable sources include:
- Savings transferred from abroad - document with wire transfer records and foreign bank statements
- Foreign property sale proceeds - document with sale contract and transfer records
- Gift from family members - banks typically accept a signed gift letter. Note: gifts above 50,000 NIS from abroad may trigger reporting requirements
- Retirement account distributions - proceeds from US 401(k) or IRA withdrawals (consider the US tax implications carefully before doing this)
Special Olim Considerations
Two specific advantages apply to olim seeking mortgages:
- Zakaut state-funded component - Directive 329 does not apply the LTV limit to a housing loan more than half of which is provided from state funds and at state risk, so the eligibility portion sits outside the 75% cap and reduces the commercial mortgage you need
- Some banks offer higher LTV for olim - a small number of Israeli banks have historically offered olim first-apartment mortgages up to 75% LTV even when the property is not the buyer's only registered property (relevant if you still own property abroad). Ask explicitly whether your bank has an oleh mortgage program
A mortgage pre-approval (ishur ekroni) from a bank is useful before you start seriously searching for property - it tells you exactly how much you can borrow and gives sellers confidence that you are a qualified buyer.
Your Israeli mortgage size is set by two Bank of Israel limits: loan-to-value (LTV) and income. For a first apartment (primary residence) you can borrow up to 75% LTV, so you need at least 25% as a down payment; a second or additional property is capped at 50% LTV, and improving housing is up to 70% in most cases. Your total monthly payment generally cannot exceed roughly 40 to 50% of net monthly income, and banks stress-test affordability at rates 2 percentage points above current levels. New olim without Israeli credit history can still qualify by documenting current income, foreign credit reports, 3 to 6 months of bank statements, and a documented down payment source. The government Zakaut subsidized portion at 3% lowers the commercial amount needed and the income required to qualify.
The Bank of Israel sets maximum LTV ratios based on how many properties you own. A first apartment (primary residence) can be financed up to 75% LTV, so you contribute at least 25% as a down payment. A second or additional property is capped at 50% LTV, meaning you bring 50% as equity. Improving housing (replacing an existing apartment) is up to 70% LTV in most cases. For example, to buy a 2,500,000 NIS apartment as your first home you need at minimum 625,000 NIS (25%) down, and the bank can lend up to 1,875,000 NIS.
Bank of Israel Directive 329 sets a hard ceiling: a bank may not approve a housing loan whose payment-to-income ratio exceeds 50%, and once the ratio passes 40% the loan must carry a 100% risk weight, which makes 40% the practical working ceiling at most banks. The same directive caps the variable-rate share of the loan at 66.66% and the final repayment period at 30 years. Banks apply their own affordability tests on top of those limits, so ask in writing which interest rate your affordability calculation was run at.
Yes. New olim do not have an Israeli credit history, and Israeli banks normally assess creditworthiness using the Bank of Israel's credit registry and Dun & Bradstreet Israel data. With no local history, banks rely more heavily on current income documentation (recent pay stubs or an employer letter for employed olim; tax returns or accountant certification for the self-employed), foreign credit reports (some banks accept a US credit report or a UK report from Experian or Equifax UK as supporting evidence), 3 to 6 months of bank statements, and documentation of your down payment source. The absence of Israeli credit history makes the process slightly more manual but does not prevent approval for olim with documented income and a sufficient down payment.
Where the down payment comes from matters to Israeli banks, and they require a source of funds declaration. Acceptable sources include savings transferred from abroad (documented with wire transfer records and foreign bank statements), foreign property sale proceeds (documented with the sale contract and transfer records), a gift from family members (banks typically accept a signed gift letter, though gifts above 50,000 NIS from abroad may trigger reporting requirements), and retirement account distributions such as US 401(k) or IRA withdrawals. Consider the US tax implications carefully before withdrawing from a US retirement account.
Two specific advantages apply. First, Directive 329 does not apply the LTV limit to a housing loan more than half of which comes from state funds and is at state risk, so a Zakaut eligibility component sits outside the 75% cap and reduces the commercial mortgage you need. Second, a small number of Israeli banks have historically offered olim first-apartment mortgages up to 75% LTV even when the property is not the buyer's only registered property, which is relevant if you still own property abroad. Ask your bank explicitly whether it has an oleh mortgage program.
In the US, mortgages are heavily FICO credit-score dependent, and a US score is not transferable to Israel because Israeli history is not built on a US Social Security Number. Early in your aliyah you can request your free US credit report from annualcreditreport.com and present it to Israeli lenders as supplementary evidence. UK borrowers are already used to LTV-based affordability limits, and the Bank of England's rule of stressing at 3% above the mortgage rate is comparable to Israel's stress test approach. UK olim should note that Israeli mortgage terms are typically 20 to 30 years, which is longer than many UK terms and reduces monthly payments but increases total interest paid.
A mortgage pre-approval (ishur ekroni) from a bank is useful before you start seriously searching for property. It tells you exactly how much you can borrow and gives sellers confidence that you are a qualified buyer. This is especially helpful for olim, since establishing how much you can borrow without Israeli credit history is a more manual process, and knowing your figure in advance lets you shop within a realistic budget.