Mortgage Financing Percentages: How Much of a Down Payment Do You Really Need?
The bank doesn't finance the full value of the apartment. The rest has to come from your own equity (the down payment), and exactly how much depends on the type of purchase.
Maximum financing percentages
Single apartment (including a first apartment): up to 75% of the property's value.
Upgraders selling an existing apartment: up to 70%.
Investment or additional apartment: up to 50%.
These are Bank of Israel caps. The bank may approve less, based on your ability to repay. Read about this limit in the article How Much Mortgage Can You Get.
Your down payment is more than 25%
Besides the difference between the apartment price and the mortgage, there are additional costs the bank doesn't finance: purchase tax (Mas Rechisha – for a single apartment there's an exemption up to a certain ceiling), lawyer's fees, brokerage, appraisal, moving and renovation. It's wise to plan a safety margin beyond the minimum.
Example: A single apartment for ₪2 million. The mortgage can go up to 1.5 million, meaning you need at least ₪500,000 of your own equity, plus the additional costs.
Where do you raise the down payment?
Savings and a study fund (Keren Hishtalmut).
Help from parents, as a gift or a loan. It's important to plan in advance how it's presented to the bank, because a loan may reduce the mortgage amount.
Selling an existing property, or a loan secured by an existing property.
More equity, a better interest rate
Generally, the lower the financing ratio, the lower the interest rate the bank offers. Sometimes adding a little to your down payment moves you down a financing tier, and saves money over all the years of the loan.
Want to plan your down payment properly? Book an introductory call.
This article is for general information only and does not constitute personal advice. Financing percentages are per Bank of Israel directives as of the time of writing.
