Buying a home in Israel starts with two questions the bank will ask before anything else: is your deposit big enough for your buyer category, and can your income carry the payment? Both answers are set by regulation, not bank policy — the Bank of Israel’s Banking Supervision Department caps loan-to-value by buyer type and limits how the loan can be structured. This calculator computes the monthly repayment on a mashkanta (משכנתא) and checks your numbers against those regulatory ceilings.
The regulatory frame: LTV caps by buyer type
| Buyer type | Maximum LTV | Minimum deposit on a ₪2m home |
|---|---|---|
| First-time buyer (single home) | 75% | ₪500,000 |
| Upgrader (selling only home to buy another) | 70% | ₪600,000 |
| Investor / additional property | 50% | ₪1,000,000 |
These are binding ceilings from the Bank of Israel’s housing-loan directives; individual banks may lend less based on income and property type, never more. Two further structural rules shape every Israeli mortgage: at least one third of the loan must be at a fixed interest rate, and the term may not exceed 30 years. Supervisory guidance also caps the payment-to-income ratio — in practice banks want the monthly payment comfortably under about 40% of net household income, and loans approaching 50% are effectively unavailable.
The payment formula
The loan is the price minus your deposit, amortised with the standard constant-payment formula:
loan L = price − deposit
monthly r = annual rate ÷ 12
payment = L × r ÷ (1 − (1 + r)^(−n)) n = monthsEach month’s payment first covers interest on the outstanding balance; the remainder reduces principal, so the interest share falls over the life of the loan (the shpitzer schedule, as Israeli banks call standard amortisation).
Worked example
A first-home purchase at ₪2,000,000 with ₪600,000 down — a ₪1,400,000 loan at a 5% blended annual rate over 25 years:
- Monthly rate: 5% ÷ 12 ≈ 0.4167%
- Payment: 1,400,000 × 0.004167 ÷ (1 − 1.004167⁻³⁰⁰) ≈ ₪8,183/month
- Total paid over 300 months: ≈ ₪2,455,000 → total interest ≈ ₪1,055,000
- LTV: 1,400,000 ÷ 2,000,000 = 70% — inside the 75% first-home cap ✓
- Income check: at a 40% payment-to-income guideline, the household needs roughly ₪20,500 net per month to carry this loan comfortably.
The same purchase as an investment property fails immediately: the 50% cap allows at most a ₪1,000,000 loan, so the buyer must find ₪1,000,000 in equity — ₪400,000 more than the first-home buyer.
The track system (maslulim): why one rate is a simplification
A real mashkanta is a portfolio, not a single loan. Banks split it across tracks, each priced separately:
- Prime-linked (צמוד פריים). Floats with the prime rate (Bank of Israel policy rate + 1.5 percentage points). No CPI indexation of principal. Payment moves whenever the Monetary Committee moves the policy rate.
- Fixed unindexed (קל”צ). Rate fixed for the term, principal not indexed. The most predictable — and usually the highest nominal rate.
- Fixed or variable CPI-indexed (צמוד מדד). The principal is adjusted monthly for inflation. Nominal rates look lower, but the balance can rise even while you pay — in high-inflation years borrowers see their payment and outstanding debt climb together.
A common blend is roughly a third in each. The regulatory minimum-one-third fixed rule bounds how aggressive the floating share can be. This calculator models one blended rate; to price a real offer, compute each track at its own rate and sum the payments. The Bank of Israel publishes average mortgage interest rates by track, which are the right benchmark when a bank quotes you.
Costs the payment figure does not include
- Mas rechisha (purchase tax) — levied on the buyer at progressive rates that depend on property value and whether it is a sole home; brackets are updated annually on gov.il.
- Appraisal (shamai) — bank-required independent valuation.
- Tabu / Land Registry registration of the property and the mortgage lien.
- Legal fees for the purchase contract and mortgage documents.
- Life and structure insurance (ביטוח חיים / ביטוח מבנה) — mandatory for the life of the loan, assigned to the bank; budget a recurring monthly cost that rises with age.
Edge cases
Early repayment penalties. Fixed-rate tracks carry a discounted-cash-flow prepayment fee when market rates have fallen below your rate; prime-linked tracks can normally be repaid without one. Mortgage refinancing (michzur) is common precisely because of the track structure — you can refinance one track and keep the others. Foreign residents face the investor LTV cap (50%) at most banks regardless of whether it is their only Israeli property, plus stricter income documentation. New-build purchases paid in stages draw the loan in tranches (often index-linked to the construction price index), so interest starts on drawn amounts before you get the keys.
Sources
- Bank of Israel — Banking Supervision (housing-loan directives and rate data)
- Israel Tax Authority — purchase tax (mas rechisha)
Estimates only. LTV ceilings, the fixed-rate minimum, and purchase-tax brackets are regulatory values that change — verify the current directives with the Bank of Israel and your lender before committing. Not financial advice.