Welcome to what might be the most practical episode we’ve ever done. Over the past few months, you’ve been sending in questions about Israeli mortgages—lots of questions. And I get it. Israeli mortgages are complicated, they work differently than mortgages in other countries, and getting this decision right matters enormously because we’re talking about what’s probably the largest financial commitment of your life.
So today, we’re doing something different. Instead of a traditional article, I’m going to answer the real questions that real people have asked us. These are your questions—from listeners, readers, and clients of israelproperty.tv. And I’m going to answer them honestly, practically, and with real-life scenarios that show you exactly how this all works in practice.
Let’s dive in.
QUESTION 1: “I’M NEW TO ISRAEL. CAN I EVEN GET A MORTGAGE?”
This is probably the most common question we get from new immigrants, and the answer is: yes, but with some conditions.
Israeli banks will lend to new immigrants, but you need to meet certain criteria. The main ones are:
First, you need to have been in Israel for at least six months, sometimes a year, depending on the bank. They want to see that you’re serious about staying and establishing yourself here.
Second, you need documented income from an Israeli source. This is the big one. If you’re working for an Israeli company or are self-employed in Israel with Israeli income, you’re in good shape. If you’re working remotely for an overseas company, it gets trickier—some banks accept this, others don’t or are more restrictive.
Third, you need that down payment—typically thirty percent of the purchase price, though some banks offer up to seventy-five percent financing for qualifying buyers.
Let me give you a real scenario:
Sarah made aliyah from New York eighteen months ago. She’s a software engineer working for an Israeli tech company, earning 25,000 shekels per month. She’s found an apartment she wants to buy for 2 million shekels.
She has savings of 700,000 shekels (thirty-five percent down payment). Her monthly income is stable and well-documented. Her employer is an established Israeli company. She has no debt.
For Sarah, getting a mortgage is very achievable. Banks will compete for her business. She’ll likely get offered loans at competitive rates because she’s a low-risk borrower—stable income, substantial down payment, working in a growth sector.
Now, contrast that with David:
David made aliyah six months ago. He works remotely for an American company, earning $8,000 per month, which he deposits in his Israeli account. He wants to buy an apartment for 1.8 million shekels and has 540,000 shekels saved (thirty percent).
David’s situation is trickier. Some banks won’t lend to him at all because his income is from abroad. Others might, but they’ll want more documentation—proof of contract, demonstrated history of payments, possibly a higher down payment or interest rate. He’ll likely need to shop around and be persistent.
The key takeaway: if you’re a new immigrant, establish yourself financially in Israel first—get an Israeli job if possible, build a payment history, live here for at least a year—before attempting to buy property. It makes the mortgage process much smoother.
QUESTION 2: “WHAT’S THIS MIXED INTEREST RATE THING? IT SOUNDS COMPLICATED.”
You’re right, it is complicated, and it’s also one of the most distinctive features of Israeli mortgages.
In many countries, you choose between a fixed rate or a variable rate for your entire mortgage. In Israel, you typically split your mortgage into multiple “tracks,” each with different interest rate structures.
Here are the common tracks:
Fixed Rate (Krisa Kavu’a): The interest rate is locked in for a set period—usually five, ten, or fifteen years. After that period, it resets to current market rates. This is your predictability track—you know exactly what you’ll pay during the fixed period.
Prime-based (Prime Minus/Plus): The rate is tied to the Bank of Israel’s prime rate, plus or minus a margin. When the prime rate changes, your payment changes. This is more volatile but often starts lower than fixed rates.
Variable/Adjustable (Mishtaneh): The rate can change based on the bank’s internal cost of funds. Less common now but still offered by some banks.
Index-Linked (Tzamud Madad): Your loan principal is linked to the Consumer Price Index (inflation index). If inflation goes up, your loan balance increases, but the real interest rate is often lower. If there’s deflation, your balance decreases.
Fixed in Shekels Non-Linked (Kavu’a Lo Tzamud): Fixed rate, but not linked to inflation. Increasingly popular.
Now, here’s a real-life scenario showing how this works:
Rachel and Michael are buying an apartment for 2.5 million shekels. They have a down payment of 750,000 shekels, so they need a mortgage of 1.75 million shekels.
The bank offers them this mix:
- 600,000 shekels (about 34%) at fixed rate of 4.5% for 10 years
- 500,000 shekels (about 29%) at prime minus 1% (currently around 3.7%)
- 650,000 shekels (about 37%) at index-linked with 2% interest
Why this mix? The fixed rate gives them stability—they know that portion won’t change. The prime-based track gives them exposure to lower rates if the Bank of Israel lowers interest rates. The index-linked track provides protection against inflation and typically has the lowest real interest rate.
Their monthly payment might start at around 7,800 shekels total, but it will fluctuate as the prime rate and inflation change. The fixed portion stays the same, but the other tracks adjust.
This diversification is actually designed to protect borrowers. Instead of betting everything on one rate structure, you’re spreading risk. It’s like diversifying an investment portfolio.
The downside? Complexity. Your monthly payment can change, which makes budgeting harder. You need to understand multiple interest rate mechanisms. It’s not as simple as “here’s your rate, here’s your payment for thirty years.”
QUESTION 3: “HOW MUCH CAN I ACTUALLY BORROW? WHAT WILL MY PAYMENTS BE?”
Banks use a formula to determine how much they’ll lend you, and it’s based primarily on your income and existing debt.
The general rule is that your total monthly debt payments—including your mortgage, any other loans, and credit card minimums—shouldn’t exceed 40% of your gross monthly income. Some banks are slightly more flexible, going up to 45% in certain cases.
Let’s work through a real scenario:
Yoni and Tamar are a young couple. Yoni earns 18,000 shekels per month as a teacher. Tamar earns 22,000 shekels per month as a nurse. Their combined gross monthly income is 40,000 shekels.
Forty percent of 40,000 is 16,000 shekels. So the bank will approve a mortgage where the monthly payment doesn’t exceed 16,000 shekels.
Using current average interest rates (let’s say around 4% blended), a monthly payment of 16,000 shekels over 25 years would support a loan of about 3 million shekels.
But here’s the catch: they have a car loan with monthly payments of 2,000 shekels. Now their available monthly payment for a mortgage is 14,000 shekels, which reduces the loan amount they qualify for to about 2.6 million shekels.
If they want to buy an apartment for 2.5 million shekels, they’d need a down payment of at least 750,000 shekels (30%), leaving them needing to borrow 1.75 million. Their monthly payments would be around 10,000 shekels—well within their qualifying range even with the car loan.
This is comfortable for them. But what if they wanted to stretch and buy an apartment for 3.3 million shekels?
With 1 million shekels down (30%), they’d need to borrow 2.3 million. That would mean monthly payments of about 13,000 shekels. Add the car loan, and they’re at 15,000 shekels in total debt payments—just under their 16,000 shekel limit.
The bank would probably approve this, but it would be tight. They’d be committing 37.5% of their gross income to debt. After taxes, this would be a significant portion of their take-home pay, leaving less cushion for other expenses, savings, and unexpected costs.
The lesson here: just because a bank will lend you a certain amount doesn’t mean you should borrow it. Leave yourself breathing room.
QUESTION 4: “I’M SELF-EMPLOYED. CAN I GET A MORTGAGE?”
Yes, absolutely, but be prepared for more documentation and scrutiny.
When you’re an employee, proving your income is straightforward—you show your pay slips and the bank can verify with your employer. When you’re self-employed, the bank needs to see that your income is real, stable, and sufficient.
Here’s what banks typically require from self-employed borrowers:
- Tax returns (dochot mas) for the past two to three years
- Financial statements prepared by an accountant
- Bank statements showing income deposits
- Evidence of ongoing business—contracts, invoices, client lists
- Business license and permits if applicable
- Sometimes a CPA letter confirming your income
Banks will typically average your income over the past two or three years. If your income is variable or increasing, they might weight recent years more heavily, but they want to see consistency.
Let me give you a real scenario:
Dina is a freelance graphic designer. Her income over the past three years:
- Year 1: 180,000 shekels
- Year 2: 220,000 shekels
- Year 3: 270,000 shekels
The bank averages this to about 223,000 shekels annually, or 18,600 shekels per month. However, because she’s self-employed, some banks will apply a “haircut”—they might only count 80-85% of this income due to perceived volatility. So they might assess her qualifying income at around 15,800 shekels per month.
At 40% debt-to-income ratio, she can support monthly debt payments of about 6,300 shekels. Over 25 years at 4% blended rate, this supports a loan of about 1.2 million shekels.
Dina has savings of 500,000 shekels. She can therefore look at apartments in the 1.6-1.7 million shekel range.
Now here’s where it gets interesting: Dina’s business is growing. Year 3’s income was significantly higher than previous years. Some banks might look at this positively and be more generous. Others might want to see another year of high income to confirm it’s sustainable.
This is where shopping around matters. Different banks assess self-employed borrowers differently, and the terms can vary significantly.
Pro tip for self-employed people: Work with an accountant to present your financials in the most favorable (but honest) light. Make sure your tax returns accurately reflect your income—don’t be overly aggressive with deductions if you’re planning to apply for a mortgage soon, as this reduces your documented income.
QUESTION 5: “SHOULD I GO THROUGH A MORTGAGE ADVISOR OR DIRECTLY TO THE BANK?”
This is a great question, and the answer is: it depends, but often using a mortgage advisor (yo’etz mashkanta) is worth it.
Here’s what a mortgage advisor does:
They work with multiple banks, so they can shop your application around and compare offers. They understand the nuances of different banks’ policies and which banks are better for different borrower profiles. They handle the paperwork and negotiations. They can often get better terms than you’d get going directly to a bank because they have relationships and bring volume.
The cost is typically a small percentage of the loan amount—usually 0.5% to 1%, sometimes a flat fee. On a 2 million shekel mortgage, that might be 10,000 to 20,000 shekels.
Is it worth it? Let’s look at a scenario:
Amir and Sigal are buying an apartment and need a 2.5 million shekel mortgage. They could:
Option A: Go directly to their current bank. The bank offers them a package with a blended interest rate that averages 4.7% over the life of the loan.
Option B: Hire a mortgage advisor for 15,000 shekels. The advisor shops their application to five banks and gets them a package with a blended rate of 4.3%.
The difference of 0.4% on a 2.5 million shekel mortgage over 25 years is about 150,000 shekels in total interest paid. Even after paying the advisor 15,000 shekels, they save 135,000 shekels.
Plus, the advisor handles all the paperwork, explains the options clearly, and negotiates terms they might not have known to ask for.
That said, if you’re financially sophisticated, fluent in Hebrew, have time to shop around yourself, and understand mortgage terms well, you can potentially get similar results going directly to banks.
The sweet spot for using an advisor is when:
- You’re not fluent in Hebrew
- You’re unfamiliar with Israeli mortgages
- Your financial situation is complex (self-employed, multiple income sources, etc.)
- You don’t have time to shop around yourself
- You want someone advocating for you in negotiations
The main downside of advisors: they sometimes have relationships with certain banks that give them better commissions, which might influence their recommendations. Ask upfront which banks they work with and how they’re compensated.
QUESTION 6: “I HAVE MONEY ABROAD. CAN I USE IT FOR MY DOWN PAYMENT?”
Yes, you can, and many new immigrants do this. But there are procedures and documentation requirements.
When you bring money into Israel for a major purchase like real estate, the banks and tax authorities need to verify that it’s legitimate funds, not money laundering. This is standard international practice, not an Israeli quirk.
Here’s what you need:
- Documentation of the source of the funds—bank statements from your foreign account showing the money existed there
- If the money came from selling property abroad, documentation of that sale
- If it came from inheritance, inheritance documentation
- If it was employment savings, proof of your employment and income history
- Wire transfer documentation showing the money moved from abroad to your Israeli account
Let me give you a real scenario:
Jennifer made aliyah from the United States two years ago. She sold her condo in Boston for $400,000. After paying off her mortgage and closing costs, she netted $180,000, which she kept in her U.S. bank account.
Now she wants to buy an apartment in Israel for 2.2 million shekels. She needs 660,000 shekels for the down payment (30%).
She wires $165,000 (about 620,000 shekels at current exchange rates) from her U.S. account to her Israeli account. Her bank in Israel asks for:
- The closing documents from her Boston condo sale
- Her U.S. bank statements showing the funds in her account
- The wire transfer documentation
- Her U.S. tax return showing the sale (if applicable)
Once she provides these, the bank is satisfied that this is legitimate money and approves it as her down payment source.
Important notes about bringing money from abroad:
Taxes: New immigrants (olim) get a ten-year exemption on taxes on money and assets brought from abroad. This is a huge benefit—Jennifer doesn’t pay Israeli tax on her U.S. real estate proceeds. But you need to document this properly.
Currency risk: When you hold dollars or other foreign currency and need shekels, you’re exposed to exchange rate risk. If the shekel strengthens against your foreign currency, your buying power decreases. Some people hedge this risk, others just accept it.
Timing: International wire transfers take a few days, sometimes more. Plan ahead so the money arrives when you need it for your purchase.
Tax reporting: Even though olim don’t pay Israeli tax on foreign assets initially, you may still have reporting requirements. Consult with an accountant who specializes in olim taxation.
QUESTION 7: “WHAT HAPPENS IF I WANT TO PAY OFF MY MORTGAGE EARLY?”
Israeli mortgages have early repayment fees, and they can be substantial. This surprises many people from countries where you can pay off your mortgage anytime without penalty.
The fees vary by the type of loan track:
Fixed-rate tracks: These typically have early repayment penalties to compensate the bank for the interest they lose. The penalty can be significant—sometimes several percent of the remaining balance.
Variable and prime-based tracks: These usually have much lower or no early repayment penalties, or penalties only in the first few years.
Index-linked tracks: Typically low or no penalties after an initial period.
Here’s a real scenario:
Eli took a 2 million shekel mortgage five years ago. He split it:
- 800,000 at fixed rate for 15 years (ten years remaining)
- 700,000 at prime-based rate
- 500,000 index-linked
He’s received an inheritance of 1 million shekels and wants to pay down his mortgage.
If he pays off the entire fixed-rate track (now about 650,000 shekels remaining), the bank charges him an early repayment fee of 3% of that amount—about 19,500 shekels. Ouch.
If he pays off the prime-based track (now about 580,000 shekels remaining), there’s no penalty.
If he pays off the index-linked track (now about 420,000 shekels remaining), there’s a small penalty of 1%, about 4,200 shekels.
So his total penalties would be 23,700 shekels if he pays everything off.
Alternatively, he could:
- Pay off the prime and index tracks entirely (no or minimal penalties)
- Pay the maximum allowed on the fixed track without penalty (usually you can pay up to a certain amount annually without fees—often around 20% of the original loan amount per year)
- Keep whatever’s left in investments or savings
Most financial advisors would tell Eli not to pay massive penalties for early repayment. Better to pay down the tracks with no penalties and make the maximum allowable penalty-free payments on the fixed track.
There’s also a philosophical question: should you even pay off your mortgage early if you have other investment opportunities? If your mortgage interest rate is 4% and you can invest elsewhere at 6-7% returns, you might be better off keeping the mortgage and investing the money. But this depends on your risk tolerance, age, and financial goals.
QUESTION 8: “WE’RE A COUPLE WHERE ONE PARTNER HAS MUCH HIGHER INCOME. HOW DOES THIS AFFECT OUR MORTGAGE?”
Banks look at total household income when determining how much to lend, but the income distribution between partners can affect the terms and structure.
Here’s a detailed scenario:
Jonathan earns 35,000 shekels per month working in high-tech. Maya earns 8,000 shekels per month working part-time while finishing her degree. They have combined income of 43,000 shekels per month.
They can support monthly payments of up to 17,200 shekels (40% of gross income), which would support a loan of around 3.2 million shekels over 25 years.
However, the bank looks at this carefully. Maya’s income is part-time and she’s still in school—the bank might assume her income could drop to zero in the near future if she focuses on studies or if they have children. Some banks might not count her income at all, or only count part of it.
If they only count Jonathan’s income of 35,000 shekels, the maximum monthly payment is 14,000 shekels, supporting a loan of about 2.6 million shekels.
This is a 600,000 shekel difference in borrowing capacity just from how the bank assesses Maya’s income.
What can they do?
Option 1: Maya provides documentation showing her part-time work is stable and continuing—a contract, letter from employer, history of consistent employment. This might convince the bank to count at least 50% of her income.
Option 2: They wait until Maya graduates and gets a full-time job, improving their borrowing capacity significantly.
Option 3: They buy a less expensive property now that fits within Jonathan’s income alone, planning to upgrade later when Maya’s income is more established.
Option 4: Both partners become co-borrowers, but they include a clause that if one income drops, they have the option to extend the loan term to keep payments manageable.
There’s also the question of whose name goes on the property title. Both names? Just the higher earner? This affects future rights, inheritance, and what happens if the relationship ends. Get legal advice on this—it’s important.
The key insight: banks are conservative about income that seems unstable. Show stability, longevity, and documentation to maximize what they’ll count.
QUESTION 9: “I’M OVER 50. WILL MY AGE AFFECT MY ABILITY TO GET A MORTGAGE?”
Age definitely affects mortgage terms in Israel, though it’s legal and standard practice (unlike in some countries where age discrimination in lending is prohibited).
The issue is loan term length. Israeli banks typically want mortgages fully paid off by the time the youngest borrower reaches age 75 or 80, depending on the bank.
Let’s look at a real scenario:
Mark is 52 years old and wants to buy an apartment. He needs a 1.5 million shekel mortgage. He has excellent income and a solid down payment.
If he applies for a standard 25-year mortgage, he’d be 77 when it’s paid off. Some banks will approve this, others won’t, and those that do might charge higher interest rates.
If the bank only approves a 20-year term, his monthly payments are higher—about 9,100 shekels versus 7,900 shekels on a 25-year term. That’s 1,200 shekels more per month, which might push him over the debt-to-income ratio limits.
What are his options?
Option 1: Apply with a younger co-borrower. If his wife is 46, they might qualify for the full 25 years (she’d be 71 at payoff). The younger spouse’s age becomes the reference point.
Option 2: Make a larger down payment to reduce the loan amount, making the higher monthly payments on a shorter term more affordable.
Option 3: Accept the shorter term and plan to make extra payments when possible to reduce the burden.
Option 4: Look for banks that are more flexible about age limits—some are more generous than others.
Option 5: Consider whether he actually wants a long-term mortgage at his age. Maybe a 15-year mortgage makes sense—he’ll be debt-free at 67, hopefully before retirement.
The flip side of age affecting mortgages: older borrowers often have substantial savings and equity from previous properties. Many people in their 50s and 60s can make larger down payments, which partially compensates for shorter loan terms.
There’s also the question of retirement income. If Mark plans to retire at 67, the bank wants to see that he’ll have sufficient retirement income to continue paying the mortgage. He may need to document pension plans, savings, or other income sources.
Bottom line: age matters, but it’s not a dealbreaker. It just requires planning around shorter terms and potentially larger down payments.
QUESTION 10: “WHAT IF WE WANT TO RENT OUT OUR PROPERTY? DOES THIS AFFECT OUR MORTGAGE?”
This is a great question because many people buy property as an investment or plan to rent it out at some point.
If you’re buying property specifically to rent out (not as your primary residence), the mortgage terms are different and usually less favorable:
- Higher interest rates (typically 1-2% higher)
- Larger down payment requirements (often 40-50% instead of 30%)
- More scrutiny of your overall financial situation
- Stricter qualification requirements
Let me give you a scenario:
Daniel already owns an apartment where he lives. He wants to buy a second apartment as an investment property for 1.8 million shekels.
As an investment property, banks require 50% down payment—900,000 shekels. He has this saved.
For the remaining 900,000 shekel loan, he’s quoted interest rates averaging about 5.5%—significantly higher than the 4% he’d get for a primary residence.
Monthly payments on 900,000 at 5.5% over 20 years (banks often offer shorter terms for investment properties) would be about 6,200 shekels.
He plans to rent the apartment for 5,000 shekels per month. The bank will consider this rental income in his debt-to-income calculations, but not at full value—they might only count 70-80% of it, assuming some vacancy and maintenance costs.
So the bank counts 4,000 shekels of rental income (80% of 5,000) toward his ability to pay the 6,200 shekel monthly mortgage. The remaining 2,200 shekels needs to come from his salary.
If Daniel earns 25,000 shekels per month, this 2,200 shekel net cost is manageable within the 40% debt-to-income ratio.
But here’s where it gets tricky: if Daniel already has a mortgage on his primary residence of 8,000 shekels per month, his total debt service is now 10,200 shekels (after counting rental income). That’s 40.8% of his gross income—right at the limit.
The bank might approve this, or they might require either a larger down payment on the investment property or additional income documentation to be comfortable with the total debt load.
Now, what if you buy property as your primary residence but later want to rent it out?
Your mortgage terms don’t change—you already have the loan at the primary residence rates and terms. But you have some obligations:
- You should inform the bank (some mortgages have clauses about this)
- The rental income becomes taxable
- You may need landlord insurance
- If you later want to sell, the tax treatment might be different (not your primary residence anymore)
Many people do this—buy an apartment, live in it for a few years, then keep it as a rental when they upgrade. It’s a legitimate wealth-building strategy, and as long as you can afford the mortgage without depending entirely on rental income, it can work well.
QUESTION 11: “HOW IMPORTANT IS MY CREDIT SCORE? I’M NEW TO ISRAEL AND DON’T HAVE ONE HERE.”
Credit scores exist in Israel but work differently than in countries like the US. The main credit bureaus are Dun & Bradstreet and Credifon, and they maintain data on borrowing and payment history.
However, if you’re a new immigrant, you won’t have an Israeli credit history yet, and that’s actually normal and understood by banks.
Here’s what banks look at for new immigrants without credit history:
- Your employment and income stability
- Your down payment amount (larger down payment reduces their risk)
- Your banking behavior—do you maintain a positive balance, or are you constantly overdrawn?
- Any debts or financial obligations in your home country that you disclose
- Your overall financial profile and assets
Let me give you a scenario:
Naomi made aliyah a year ago from Canada. She has no Israeli credit history. In Canada, she had excellent credit—multiple credit cards paid on time, a car loan she paid off, a mortgage on a condo she sold before making aliyah.
She applies for an Israeli mortgage. The Israeli bank can’t see her Canadian credit score directly, but she provides:
- A letter from her Canadian bank confirming her good standing
- Documentation of her Canadian mortgage payments over five years
- Credit card statements showing responsible use and payment
- Bank statements showing she maintained healthy balances
The Israeli bank looks at this positively. Even though she doesn’t have an Israeli credit score, she’s demonstrated financial responsibility in her home country. Combined with her stable Israeli income and substantial down payment, she’s a good candidate for a mortgage.
Contrast this with Ben:
Ben made aliyah three years ago. He’s been employed steadily but immediately got an Israeli credit card and ran up debt. He’s made some late payments. His bank account is often overdrawn. He has a car loan that he was late on twice.
Ben is building an Israeli credit history, but it’s a negative one. When he applies for a mortgage, the bank sees red flags. They’ll either decline him or offer less favorable terms—higher interest rates, stricter conditions, or requirement for a larger down payment.
The lesson: from day one in Israel, manage your finances responsibly. Pay every bill on time. Maintain positive bank balances. Use credit cards wisely. Even before you’re thinking about buying property, you’re building the credit history that will affect your mortgage application.
If you have bad credit from abroad, is it a dealbreaker? Not necessarily, especially if you can show it’s in the past and your Israeli financial behavior is good. But you’ll need to explain the circumstances and demonstrate that you’ve changed your habits.
QUESTION 12: “WE’RE THINKING OF BUYING WITH FAMILY—PARENTS OR SIBLINGS. HOW DOES THIS WORK WITH MORTGAGES?”
Co-buying property with family members is increasingly common in Israel, especially given high property prices. But it adds complexity to the mortgage process.
Here’s a detailed scenario:
Aaron and Shira are a young couple who want to buy their first apartment. They have some savings but not enough for a full down payment. Aaron’s parents, who are more established financially, offer to help by co-buying the property.
Here’s how this might structure:
Option 1: Parents provide down payment, young couple gets mortgage
Parents gift or loan 500,000 shekels for the down payment on a 2 million shekel apartment. Aaron and Shira get a mortgage for the remaining 1.5 million shekels based on their income.
The property title could be:
- 100% in Aaron and Shira’s names (if parents’ money is a gift)
- Split ownership reflecting contribution (if parents want equity)
The mortgage is entirely in Aaron and Shira’s names, based on their income and creditworthiness.
Option 2: All parties as co-borrowers
The property title includes all four people. The mortgage application includes all four incomes, allowing for a larger loan if needed.
The bank assesses everyone’s debt-to-income ratios. If the parents already have a mortgage on their own home, this is factored in. The combined income of all four means they can likely support a larger mortgage, but all parties are equally liable.
Option 3: Parents as guarantors
Aaron and Shira are the primary borrowers, but parents co-sign as guarantors. This gives the bank additional security (if the kids can’t pay, parents are liable), which might result in better terms or approval for a larger amount.
The property title can be structured however they want, but the guarantors are financially responsible even if they’re not owners.
What are the implications?
- All owners need to agree on any future sale or refinancing
- If relationships sour, untangling co-ownership can be messy
- Tax implications—if parents own part of a property they don’t live in, there are different tax rules
- Estate planning—what happens to the parents’ share when they pass away?
- If Aaron and Shira want to sell in five years and buy another place, the parents’ involvement could complicate this
My advice: Get everything in writing with a lawyer. Document:
- Ownership percentages
- Who pays what (mortgage, property taxes, maintenance)
- What happens if someone wants to sell their share
- What happens if the relationship ends (for the married couple)
- What happens when parents pass away
- How decisions get made
This isn’t unromantic or distrustful—it’s practical and protects everyone. Many family co-buying arrangements work out beautifully, but the ones that don’t often end up in court because expectations weren’t clear from the start.
QUESTION 13: “I HEARD ABOUT MORTGAGES FOR OLIM WITH SPECIAL TERMS. WHAT ARE THESE?”
Great question! New immigrants (olim) are eligible for certain benefits and special mortgage programs, though the landscape has changed over the years.
Here’s what’s currently available:
Mishkan—The Immigrant Mortgage Program:
This is a government-backed program offering favorable terms to new immigrants. Key features:
- Available for up to 10 years after making aliyah
- Offers below-market interest rates (the rate is set and updated periodically)
- Maximum loan amount varies (currently around 1.5 million shekels, but check current limits)
- Must be for your primary residence
- Can be combined with regular bank financing
Let me show you a real scenario:
Rebecca and David made aliyah three years ago. They’re buying an apartment for 2.5 million shekels. They have 800,000 shekels for a down payment, needing to borrow 1.7 million shekels.
They structure it as:
- 1.2 million shekels through the Mishkan program at 2.5% (favorable rate)
- 500,000 shekels through regular bank financing at 4.5%
Their blended rate is around 3.2%, significantly better than the 4.5% they’d pay for the entire amount through regular financing. Over 25 years, this saves them hundreds of thousands of shekels in interest.
Special programs for olim with specific skills:
Sometimes there are programs for medical professionals, engineers, or other needed professions offering additional benefits or assistance. These come and go based on government priorities, so check what’s current.
Reduced purchase tax (mas rechisha):
While not specifically a mortgage benefit, new immigrants get significant reductions on purchase tax for their first property purchase, which indirectly helps with affordability.
Foreign currency mortgages:
Some banks offer olim the option to take mortgages in foreign currency (dollars, euros) if you have income in that currency. This can be beneficial if you’re working remotely for a foreign company, but it carries exchange rate risk.
Important notes:
- These benefits have time limits—use them or lose them
- Requirements and terms change, so verify current details before planning
- You usually can’t combine all benefits—sometimes you have to choose
- Benefits are only for your first property purchase in Israel in most cases
The bottom line: being a new immigrant comes with real financial advantages when buying property. Take full advantage of these while you’re eligible, because once the window closes, you’re just like any other Israeli buyer.
PUTTING IT ALL TOGETHER: A COMPLETE CASE STUDY
Let me end with a complete, detailed case study that brings together many of these concepts.
The Situation:
Michael and Jennifer are making aliyah from the United States with their three children. Michael is 38, Jennifer is 36. They sold their house in New Jersey and have $350,000 in proceeds, plus another $100,000 in savings—total of $450,000 (about 1.68 million shekels).
Michael has a job offer from an Israeli tech company paying 32,000 shekels per month. Jennifer is a teacher and has a job lined up paying 14,000 shekels per month. Combined monthly income: 46,000 shekels.
They want to buy a four-bedroom apartment in a good school district in central Israel. Properties in their target area are around 3.2 million shekels.
The Analysis:
Down payment needed (30%): 960,000 shekels
They have: 1.68 million shekels
Mortgage needed: 2.24 million shekels
Can they qualify?
Maximum monthly debt payment at 40% of income: 18,400 shekels
Monthly payment on 2.24 million at 4% over 25 years: About 11,800 shekels
Yes, they easily qualify from an income perspective.
The Strategy:
- Use Mishkan program: Borrow 1.2 million at favorable rate (let’s say 2.5%)
- Regular financing: Borrow 1.04 million at market rate (let’s say 4.5%)
- Split the regular portion:
- 400,000 fixed rate at 4.5% for 10 years
- 300,000 prime-based at 4%
- 340,000 index-linked at 2.5%
- Use a mortgage advisor: Pay 15,000 shekels for advisory service to shop around and get the best possible terms
- Document everything: Wire their U.S. money in advance, with full documentation of source, qualifying for the olim tax exemption
The Outcome:
Monthly mortgage payment: About 10,200 shekels (blended)
This is only 22% of their gross income, leaving plenty of room for other expenses
They have about 700,000 shekels left after down payment and closing costs for furniture, emergency fund, and initial expenses
Five Years Later:
Michael’s salary has increased to 45,000 shekels. Jennifer is now working full-time earning 18,000 shekels. Combined income: 63,000 shekels.
Their apartment has appreciated to 4 million shekels. Their mortgage balance is down to about 1.9 million shekels. They have equity of 2.1 million shekels.
They’re considering:
- Paying down mortgage with savings vs. investing elsewhere
- Possibly buying an investment property
- Eventually upgrading to a larger home
They work with a financial advisor to make these decisions based on current interest rates, their risk tolerance, and long-term goals.
This is what successful mortgage planning and execution looks like in Israel.
FINAL THOUGHTS: YOU’VE GOT THIS
Israeli mortgages are complicated. There’s no denying it. The multiple tracks, the unfamiliar terms, the bureaucracy, the documentation requirements—it can all feel overwhelming, especially if you’re new to the country.
But here’s what I want you to remember: thousands of people successfully navigate this process every year. You can too.
The key is education—understanding how it works—and preparation—getting your documents, finances, and plans in order before you start the process.
Don’t be afraid to ask questions. Banks expect you to ask questions, especially if you’re a new immigrant. Mortgage advisors exist specifically to help you through this.
And remember: while the mortgage process is complex, it’s ultimately just financing. What really matters is finding the right property, in the right location, at the right price, that fits your family’s needs and your long-term plans.
The mortgage is just the tool that makes it possible.
Welcome to Israeli homeownership. It’s a journey, but it’s worth it.
For more information about Israeli real estate and mortgages, visit israelproperty.tv
Have more questions? Send them to us and we’ll answer them in future episodes!