More Financing Than You Think

One of the most common reasons people postpone buying property in Israel is the belief that they simply don’t have enough cash.

Over the years, I’ve spoken with countless buyers who assumed they were limited to a 50% mortgage and would therefore need to fund the other half of the purchase themselves. In many cases, that assumption was simply wrong.

Israeli mortgage regulations can be confusing, and the rules are not always as straightforward as they appear. There are also financing options available today that didn’t exist a few years ago.

If you’re planning to purchase property in Israel, it’s worth understanding what may actually be available before deciding that you can’t afford to buy.

Foreign Residents May Qualify for More Than 50%

The general rule is well known:

• Israeli residents purchasing their first home can borrow up to 75% of the property’s value.
• Israeli residents purchasing an additional property are generally limited to 50%.
• Foreign residents are often told they can only borrow up to 50%, even when purchasing their first property.

While this is often true, there are important exceptions that many buyers—and even some professionals—overlook.

For example, a foreign resident who is also an Israeli citizen purchasing their first home in Israel may be eligible for up to 75% financing from an Israeli bank.

Similarly, someone who is not yet an Israeli citizen but intends to make aliyah within the next two years may also qualify for financing of up to 75%, provided they meet the bank’s requirements.

These exceptions can significantly reduce the amount of cash needed to complete a purchase.

Buying Before Selling? You May Not Need to Wait.

Another situation that frequently arises involves homeowners who want to upgrade to a larger property.

Many people assume they must first sell their existing home before they can buy another. Otherwise, they worry they’ll only qualify for a 50% mortgage as owners of a second property.

Fortunately, that’s not always the case.

If you intend to sell your current home after purchasing your new one, Israeli banks may allow you to finance the purchase using a combination of:

• A standard mortgage of up to approximately 70% on the new property, and
• A bridge loan secured against your existing property.

Depending on your available equity, this structure can sometimes provide financing equal to the entire purchase price of the new home.

This allows buyers to purchase first and sell later, avoiding the pressure of trying to coordinate two transactions on the same day or moving into temporary accommodation while searching for a new home.

When the Bank Says No

Even after maximizing the amount available from the bank, some buyers still find themselves short of the funds they need.

In recent years, an additional option has become available through licensed non-bank lenders.

These institutions can often provide supplementary financing above the amount approved by the bank, bringing total financing to as much as 85% of the property’s value in suitable cases.

These loans generally carry higher interest rates than traditional bank mortgages, so they should not be viewed as a first choice. However, they can be an effective solution for buyers with strong repayment ability who simply don’t have enough available cash to complete the purchase.

For some purchasers, this additional financing can mean the difference between buying now and waiting several more years.

Every Situation Is Different

Mortgage regulations are only part of the picture.

The amount you can actually borrow depends on many factors, including your income, existing financial commitments, age, citizenship status, residency, future plans, and the specific property you intend to purchase.

Two buyers with similar financial circumstances may qualify for very different financing structures based on details that seem relatively minor.

That’s why it’s important not to rely on general rules or information you’ve heard from friends or online forums.

The Bottom Line

If you’ve assumed that you don’t have enough cash to buy property in Israel, it may be worth taking another look.

Between exceptions to the standard lending rules, bridge financing for homeowners upgrading their property, and the availability of supplementary funding from non-bank lenders, there are often more possibilities than buyers realize.

The right financing structure won’t be the same for everyone, but understanding all of the available options could make purchasing your Israeli property possible sooner than you expected.

Before deciding that a purchase is out of reach, speak with an experienced mortgage professional who understands both the traditional banking system and the alternative financing options available today. You may discover that you can borrow considerably more than you thought.