Updated: October 2026 · e-land editorial team
Disclaimer: The information in this article is general, correct as of the update date, and does not constitute financial advice or a recommendation of any particular track. Interest rates and rules change from time to time. Before making decisions, we recommend consulting a licensed mortgage advisor.
A mortgage is usually the largest financial commitment we take on in life, and it stays with us for 20 to 30 years. The difference between a well-planned mortgage and one taken under pressure can amount to hundreds of thousands of shekels over the years. In this guide we explain what is permitted, what is advisable, and what is important to check before signing.
Where do interest rates stand today?
On September 1, 2026, the Bank of Israel cut its interest rate by 0.25%, to 3.25%, and in its decision of October 21, 2026 left it unchanged. The prime rate, which serves as the basis for many mortgage tracks, is 1.5% above the Bank of Israel rate and therefore currently stands at 4.75%.
Interest rates change from time to time. Check the current rate on the Bank of Israel website.
How much can the bank finance?
The Bank of Israel limits the financing ratio relative to the value of the apartment, according to the type of buyer:
| Type of purchase | Maximum financing | Minimum equity |
|---|---|---|
| Single apartment | 75% | 25% |
| Replacement apartment (upgraders) | 70% | 30% |
| Investment apartment | 50% | 50% |
Remember: your equity must also cover purchase tax, attorney's fees, brokerage and related expenses. The bank does not finance these (see our guide to purchase tax).
Reduced-price apartments (such as the "Dira BeHanacha" program): the Bank of Israel raised the value ceiling used to calculate the financing percentage from ILS 1.8 million to ILS 2.1 million, and the bank may rely on the market value up to this ceiling rather than on the reduced price. In many cases this reduces the equity required.
How much of your salary may go toward repayment?
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The ceiling: the monthly repayment may not exceed 50% of the household's disposable (net) income.
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In practice: above 40%, the bank is required to allocate more capital, so many banks in this situation offer a higher interest rate, require additional collateral or approve a smaller loan.
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A new rule from July 1, 2026: when taking an additional loan on the same property (for example for renovation), the bank examines both repayments together against income.
We recommend leaving a safety margin. A repayment that sounds reasonable today may become burdensome when interest rates rise, when a child is born or when a source of income is lost.
The tracks: what are you actually choosing?
A mortgage is usually a "mix" of several tracks:
| Track | How it works | Advantage | Risk |
|---|---|---|---|
| Prime | Variable interest linked to the Bank of Israel rate | Can be repaid early without an early repayment fee | The repayment rises when interest rates rise |
| Fixed, non-linked | Fixed interest and repayment for the entire period | Full certainty | Higher initial interest rate, and a possible early repayment fee |
| Fixed, CPI-linked | Fixed interest, but the principal is linked to the consumer price index | Lower interest rate | Inflation increases the debt |
| Variable every 5 years | Interest that is updated every few years | An exit point at the time of the change | Uncertainty about future interest rates |
The Bank of Israel rule
The variable-rate portion is limited to two-thirds of the mortgage. Therefore at least one-third must be at a fixed rate.
Maximum term
Usually 30 years. A longer term reduces the monthly repayment, but greatly increases the total interest you will pay.
Developer financing promotions
In recent years, promotions such as "20/80" have become common, in which you pay 20% of the price now and the rest on delivery, or loans whose interest the developer pays until delivery. The Bank of Israel imposed restrictions on these promotions in a temporary directive that is expected to apply until the end of 2026. What is important to understand as buyers:
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The benefit is included in the price. Compare the promotional price with the price under regular (linear) payment.
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Risk on delivery. On the delivery date you will need to finance a large amount at once. If interest rates have risen, or your old apartment has not been sold, this can be dangerous.
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Confirm in advance what a bank will finance on delivery. Do not rely solely on the developer's promise.
Checklist: before signing a mortgage
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An approval in principle before signing the purchase contract. It clarifies how much you can actually receive.
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Offers from several banks. Interest differences between banks can add up to large amounts.
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Compare by total cost, and not only by the first monthly repayment.
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A spread between tracks that suits your ability to withstand changes in interest rates and inflation.
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Check your eligibility for an entitled mortgage (mashkanta mezaka) and assistance tracks of the Ministry of Construction and Housing.
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Life insurance and building insurance. The bank requires them, but you can buy them from an insurance company of your choice and compare prices.
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A safety margin in the repayment. Check what will happen if interest rates rise by 2%.
The bottom line
A good mortgage is one you can sustain even in a less favorable scenario, not the one with the lowest monthly repayment. A conversation with an independent mortgage advisor before signing can save a great deal of money.
Disclaimer: The information in this article is general, correct as of the update date, and does not constitute financial advice or a recommendation of any particular track. Interest rates and rules change from time to time. Before making decisions, we recommend consulting a licensed mortgage advisor.
Sources
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Bank of Israel, interest rate announcement of September 1, 2026: Link (in Hebrew)
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Bizportal, "How much of your income may go toward a mortgage?" (September 2026): Link (in Hebrew)
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Calcalist, "New rules in the mortgage market" (February 2026): Link (in Hebrew)
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Nadlan Center, on the restriction of developer financing promotions: Link (in Hebrew)
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Bank of Israel, Proper Conduct of Banking Business Directive 329 (limitations on housing loans)
