Contained below is a list of the most frequently asked questions about mortgages in Israel.
With over 12 years of experience, the questions listed on this page are by far and away the most asked of our brokers at First Israel Mortgages.
If we have missed any key questions or requests regarding mortgages in Israel, or about the process, please do not hesitate to contact us.
No question or query is too small for us at First Israel Mortgages!
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How much financing will the bank provide me?
Israeli citizens are able to obtain up to 75% financing on a purchase property (if it is their sole property) and up to 50% financing on an existing property.
Non-Israeli citizens are currently limited to 50% financing.
Can I refinance a mortgage taken in Israel?
Refinancing in Israel entails low fees and no additional taxes.
It is important to note however that there may be pre-payment penalties associated with refinancing a mortgage which must be taken into account.
For more on refinancing, see our mortgage services page, specifically the second section.
Can I go into an Israeli bank branch in the U.S. to submit paperwork for my mortgage in Israel?
Israeli bank branches in the U.S. are often separate corporations from the ones in Israel and generally do not correspond with each other.
Do I have to be in Israel to obtain a mortgage?
A power of attorney, and other requisite paperwork, can be signed either at an Israeli consulate or via notary/apostille in your country of residence.
Will taking a mortgage in Israel affect my credit in the United States?
Mortgages and other credit extended in Israel are not reported to the U.S. credit bureaus.
Which lenders does First Israel work with?
First Israel works with all of the banks in Israel as well as a number of private lenders and insurance companies.
The banks First Israel Mortgages works with include: Bank Leumi, Bank of Jerusalem, Israel Discount Bank, Bank Mizrahi-Tefahot, Mercantile Discount Bank and Bank Hapoalim.
How long does the mortgage process take?
From the time your documentation is received, the process can take between three to six weeks to fund your mortgage.
Is my mortgage in Israel tax deductible?
For Israeli citizens filing taxes in Israel, mortgage interest is not currently tax deductible.
However, United States citizens may deduct mortgage interest paid on their home in Israel from their U.S tax returns, provided they itemize the deductions on Schedule A.
Can I obtain mortgage insurance in Israel?
Mortgage insurance is not currently available in Israel.
Are there fixed rates in Israel?
Fixed rates are available in Shekels, Dollars and Euros through a select number of Israeli banks.
Rates can vary greatly on these products from bank to bank. Keep up to date with Israel’s mortgage rates on this page.
How much will I qualify for when applying for a mortgage?
Most Israeli banks usually use traditional underwriting criteria when qualifying debt to income ratios: a 33% monthly mortgage payment to net income ratio.
However, there are other factors that can affect the banks’ decision.
Qualifying rates, typically 2-3% above the adjustable rate, are used when qualifying your payment on adjustable loans, impacting the amount for which you may qualify.
If you have significant liquid assets but lack income, the loan may still be approved.
Credit and debt need to be analyzed as well.
These are some of the reasons why we often advise our clients to apply for an “ishur ikroni” or pre-approval before signing a contract to purchase property in Israel.
Frequently Asked Questions: Mortgages in Israel
The approval process can take from a few days to a few weeks; mostly depending on the complexity of the file. The approval will usually be valid for 90 days and will cover most residential properties. There are exceptions, and it is always best to check with a lender to confirm a property has no issues that would make it unsuitable for financing. After the 90-day period, getting an approval extended is fairly straightforward assuming that the borrower’s financial situation has not deteriorated significantly.
There are two main hurdles that you need to overcome in order to qualify for a mortgage; enough cash to cover the required down payment and enough income to cover the expected mortgage payments.
No. A power of attorney, and other requisite paperwork, can be signed either at an Israeli consulate or via notary/apostille in your country of residence.