The Israeli mortgage (mashkanta), explained: the complete guide

What a mashkanta is, in one definition

A mashkanta is a bank loan secured by a lien (mashkanta also means the mortgage charge itself) registered at the Tabu (land registry) on the property you buy. The bank pays the funds directly to the seller or the developer, never into your account, and keeps the right to have the property sold if the payments stop. Until the property is registered in your name, the bank protects itself with a hearat azhara (caution note) at the Tabu, then with the mortgage charge itself at final registration.

Three features set it apart from what an American, British or Canadian buyer knows. The loan has not one rate but several, spread across tracks that you put together yourself. Part of it can be indexed to inflation, which does not exist in the US or UK retail market. And the bank’s decision depends first on public Bank of Israel rules (financing caps, minimum fixed share, payment-to-income), identical for every bank, before it depends on its commercial policy.

Five banks share most of the market: Mizrahi-Tefahot (the country’s largest mortgage lender), Leumi, Hapoalim, Discount and Bank of Jerusalem. They offer the same tracks; what changes is the margin each one takes on each track, and that is where the negotiation happens.

How a bank decides: three caps that stack

The bank does not lend you "what you ask for". It applies three limits and keeps the lowest.

1. The financing cap (LTV)

The Bank of Israel directive sets the maximum loan-to-value ratio by situation. The "value" is the lower of the contract price and the valuation by the shamai (bank-approved appraiser).

2. The payment-to-income ratio

The monthly payment on all your debts (mortgage included) must not exceed 35 to 40% of the household’s net income. The regulatory cap is 50%, but above 40% the bank has to set aside more capital and almost always refuses. Income that counts: net salaries (average of the last three months), self-employed income (average of the last two tax years), rent received (often at 70 to 80%), pensions. Foreign-currency income is converted with a 10 to 20% haircut.

3. Age

The loan must be repaid before age 75 at most banks, 80 at some. A 50-year-old borrower therefore gets 25 years at most; at 60, 15 to 20 years, which raises the payment and so the payment-to-income ratio. Life insurance, which is mandatory, also becomes more expensive and harder to obtain after 60.

The tracks (maslulim): what you put together

A track is a slice of the loan with its own rate, its own term and its own adjustment rule. A typical loan has three or four. Here are the five that every bank offers.

How to read all this: prime is the flexible slice, the one you repay first if you receive an inheritance or sell another property. Fixed unlinked is the safety slice, the one that guarantees a roof even if everything goes wrong. Fixed CPI-linked is a measured bet on low inflation; it mainly helps squeeze a tight payment-to-income ratio through, because its starting payment is lower. The five-year variables are useful compromises when you expect to sell or refinance within five to ten years.

For a buyer whose income is in dollars or pounds, the advice is simple: overweight the fixed unlinked track. You already carry currency risk; there is no point adding rate risk and shekel inflation risk. Rates by track and by term are detailed on the page Israeli mortgage rates today.

The one-third rule and the Spitzer method

The one-third rule. Since 2011, the Bank of Israel requires that at least one third of the loan be at a fixed rate (linked or unlinked) and at most two thirds at a variable rate. Within the variable share, prime and other short-term variables cannot exceed two thirds of the total loan. The "classic" mix that satisfies all this: one third prime, one third fixed unlinked, one third fixed CPI-linked. Many brokers now propose 40% fixed unlinked, 35% prime, 25% linked, which is more defensive.

The Spitzer method. This is the level-payment amortisation you know from a US or UK repayment mortgage: every month you pay the same amount, made up mostly of interest at first, then mostly of principal. Every Israeli bank applies it by default. The alternative, keren shava (constant principal), lowers the payment every month and costs less interest in total, but starts 15 to 20% higher; it is rarely chosen because it hurts the payment-to-income ratio at the moment the bank calculates it.

In a CPI-linked track, Spitzer applies to the revalued principal: the payment is recalculated every month on a principal that has grown with inflation. That is why a linked payment "moves" even though the rate is fixed.

Simulate your loan

The calculator below applies the Bank of Israel caps to your profile, splits the loan between three tracks at November 2026 rates and calculates the monthly payment, total cost and required income. The full version, with export, is on the page Israeli mortgage calculator.

Procedure, documents and timelines

1. Pre-approval (ishur ekroni). This is the first thing to do, before you even view properties. You submit proof of income and down payment; the bank tells you how much it would lend and on what terms. Free, no obligation, valid 24 days, renewable. Timeline: 2 to 7 days for a resident. A buyer negotiating with an ishur ekroni in hand is taken seriously by the seller.
2. Signing the sale contract (heskem mechira). Your lawyer inserts a payment schedule compatible with the bank’s funding: the deposit (10 to 20%) comes from your own funds, the balance from the bank. If the bank’s approval is not yet final, a financing contingency clause protects you.
3. Appraisal (shamai). The bank appoints a licensed appraiser, ₪600 to ₪1,500 at your expense. If the appraisal comes in below the price, financing is calculated on the appraisal and the gap must be covered from your down payment. Timeline: one week.
4. Final offer and choice of tracks. The bank issues an offer sheet detailing each track, its rate, term and payment. This is the moment to negotiate, or to play a second bank against it. Banks are required to give you a standardised comparison document.
5. Insurance. Life insurance (bituach hayim) covering the outstanding principal and building insurance (bituach mivneh). The bank offers its own; you have the right to buy elsewhere, often 20 to 40% cheaper. In wartime, these policies and the Bank of Israel payment deferrals are described in what happens to my mortgage during a war.
6. Signing the loan documents and funding. At the branch, with both borrowers present. The funds are wired to the seller according to the contract schedule. The bank registers its security at the Tabu. Total timeline for a resident: 2 to 4 weeks from file to funding.

A resident’s documents

• ID card (teudat zehut) of both borrowers and, for an oleh, teudat oleh.
• Employees: last three pay slips (tlushei sachar) and form 106 for the previous year. Self-employed: financial statements and tax returns for the last two years (shuma), accountant’s letter.
• Statements for the last three months of every bank account, with proof of the source of the down payment.
• Amortisation schedules of existing loans (car, consumer credit).
• Sale contract or draft contract, Tabu extract (nesach Tabu) of the property.
• For an off-plan purchase: developer’s contract and Sale Law guarantee.

Non-residents have a thicker file, translations and signatures abroad: everything is detailed on the page mortgages for non-residents. New immigrants, for their part, can get up to 75% with no Israeli credit history: see mortgage for new olim.

Bank fees and insurance

Both policies are required by the bank, but the law leaves you free to choose the insurer. The bank cannot make the rate conditional on buying its own policy. Compare: over 25 years, a ₪60 monthly difference is ₪18,000.

The full budget of a purchase, purchase tax and lawyer included, is detailed on the page what buying really costs. For Israeli tax in the broad sense (income tax, tax residency, the US–Israel and UK–Israel treaties), see Shekel Guide.

Prepayment, penalties and michzur

You can repay all or part of your mortgage at any time, with ten days’ notice. The bank charges:

• a fixed processing fee, a few dozen shekels;
• a no-notice fee of 0.1% if you repay without the ten days;
• on CPI-linked tracks repaid between the 1st and the 15th of the month, an indexation adjustment of half a month;
• on fixed-rate tracks, a rate-differential penalty (amlat hivun) if the average market rate at the time of repayment is below your loan rate. It compensates the bank for lost interest and can reach several percent of the principal repaid. It is reduced by 20 to 30% depending on the age of the loan, and is zero if rates have risen.

Prime and the variables at their reset date can be repaid without a differential penalty. That is why you size the prime track on the amount you expect to be able to repay in the first years.

Michzur (refinancing) means repaying your loan with a new one, at the same bank or another, to benefit from lower rates, shorten the term or change the mix. It is worth it when the interest saving exceeds the penalty and the file fees; in 2026, after the policy rate fell from 4.5% to 3.25%, many 2023 borrowers gain on their prime share and their variables, less on their fixed because of the penalty. Every bank is required to give you, within a few days, a balance and penalty statement (doch yitrot le-siluk) that lets you do the arithmetic.

The differences from a US or UK mortgage

The practical consequence: an American or British buyer often arrives with two reflexes that cost money in Israel, looking for "the" lowest rate without looking at the structure of the loan, and waiting for the bank to propose, whereas here it is the borrower (or their broker) who builds the loan and plays the banks against each other.

Full example: resident, first home at ₪2.5M

Resident couple in Jerusalem, combined net income ₪30,000 a month, aged 38 and 36, no other loans. Purchase of a 4-room resale apartment at ₪2,500,000 in Arnona (see the page real estate in Jerusalem). First and only home: 75% financing.

Three readings of this table. First, the linked track saves ₪720 a month at the start compared with fixed unlinked, and that is what brings the file under 35%; but its payment will have overtaken the fixed one around year fifteen if inflation stays at 1.6%, much sooner if it picks up. Second, if the policy rate falls another point in 2027, the prime track payment drops by about ₪330. Third, a ₪300,000 inheritance in five years would go on prime first, without penalty, and cut the payment by about ₪1,600.

The same property bought by a non-resident: 50% financing, down payment ₪1,250,000, mas rechisha ₪200,000 (8% from the first shekel), payment of about ₪6,600. The minimum deposit for each status, costs included, is summed up in how much deposit do I need. The tax calculation for each status is on the purchase tax calculator.

What changes in 2027

• Rates. The policy rate went from 4.5% to 3.25% during 2026. The market expects a slow continuation of the cuts in 2027, towards 2.75 to 3%, if inflation stays close to the 1 to 3% target. Prime would follow mechanically (policy rate + 1.5%). Fixed rates already price in these expectations and will move little: do not wait for fixed to fall.
• Financing caps. No change announced for 2027: 75 / 70 / 50% remain the rule, and so does the minimum one-third fixed share.
• Mas rechisha. The bracket thresholds are frozen until 15 January 2028: the ₪1,978,745 exemption threshold for a resident’s only home will not be revalued in January 2027, which, with prices rising, pushes more buyers into the 3.5% bracket.
• Bank practice. The Bank of Israel tightened its supervision of developer financing structures in 2025-2026 (20/80 schedules, "balloon" loans where the buyer pays nothing before delivery). Expect stricter conditions on these products, and a tighter analysis of the payment-to-income ratio at delivery rather than at signing.

In plain terms: if you have to sign in 2027, size your prime share with the expected cut in mind, but keep one third fixed unlinked in case the scenario does not play out. And re-read the page rates today the week you sign.

Frequently asked questions

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