A mortgage preapproval in Israel (ishur ekroni) is the document in which a bank states how much it is prepared to lend you, over how many years, in which tracks and at what interest rates. A buyer in north Tel Aviv or the surrounding cities who holds a mortgage preapproval in Israel before making an offer enters the negotiation knowing exactly what the budget is, rather than discovering after signing that the bank sees the deal differently. In this guide we explain what the preapproval includes and what it does not, what the bank actually checks, how much you can borrow by type of apartment, how to read the mortgage mixes the bank presents, and we work through a full example of an apartment in Ramat Aviv Gimel. The rules are accurate as of October 2026, and every financing decision should be reviewed with the bank and a mortgage advisor.
What a mortgage preapproval in Israel is, and what it is not
A mortgage preapproval is a written offer from the bank, based on the information you have provided: income, liabilities, equity and the property you want or the price range you are looking at. It sets out the loan amount, the term, the tracks and the interest rate on each track, the fees and the required insurance. It is issued free of charge.
It is important to understand the limits of the commitment. The bank is bound by the terms and rates in the preapproval for 24 days from the date it is issued, provided the information you gave has been verified and found accurate. You, on the other hand, are not bound by anything: you can request preapprovals from several banks, compare them and choose. If the 24 days pass before the deal is ready, you can usually ask for an extension or an updated preapproval, although the rates may change.
What the preapproval is not: it is not final approval (ishur sofi). At the final stage the bank examines the property itself through its own appraiser, receives the sale agreement and the title documents, and only then approves the loan. A preapproval is therefore a planning and negotiating tool, not a commitment to finance a specific property.
When to request a mortgage preapproval in Israel: before the search, not after the offer
The most common mistake is to request a preapproval only after an apartment has been found and a price agreed. In the north Tel Aviv market, where a good apartment in Ramat Aviv Gimel, Bavli or Tzahala sometimes sells within weeks, a buyer who starts the process with the bank only after agreeing on the price loses valuable time, and sometimes finds that the amount they had in mind is not approved.
The right order looks like this:
- Map your actual equity: liquid savings, provident funds and deposits with a known release date, and documented family support.
- Request a preapproval from two or three banks, based on the price range you are looking at.
- Calculate the full budget, including purchase tax, legal fees, brokerage fees and related costs.
- Only then begin a focused search and negotiate the price.
- Once an apartment has been found: update the preapproval for the specific property, and time the signing so that the preapproval is still valid or can be renewed.
A valid preapproval also gives you an advantage with the seller. A seller who receives two similar offers will often prefer the buyer who has shown that their financing has been checked, because the risk of the deal stalling is lower.
What the bank checks: income, repayment ratio and credit history
The repayment ratio
The main constraint is the repayment ratio, meaning the share of monthly disposable income that goes toward the mortgage payment. Under Bank of Israel Proper Conduct of Banking Business Directive 329, a bank will not approve a housing loan when the repayment ratio exceeds 50%. Above 40% the loan is already considered riskier, and the bank must hold more capital against it. In practice, at most banks 40% is the line at which negotiation becomes harder and the rates offered may rise.
How income is counted
The bank counts stable, documented income: net salary according to pay slips, business profit according to annual statements, fixed pensions and allowances, and sometimes part of the rental income. Variable income, such as an annual bonus or irregular overtime, is counted at a reduced rate or not at all. For the self employed the basis is the profit in the annual report after recognized expenses, which is often lower than what the business owner feels they earn. At the same time the bank deducts fixed monthly obligations: other loans, car leasing and long term credit card installments.
Credit data and bank statements
With your consent, the bank receives a report from the Bank of Israel credit data register and reviews your bank statements for the last three months. Overdrafts beyond the approved limit, returned checks or a loan not disclosed on the application form may change the terms. It is worth closing small loans and settling overdrafts before you submit the application, not after.
The basic documents for the application: copies of identity cards with the appendix, recent pay slips or, for the self employed, an accountant’s confirmation and a tax assessment, three months of bank statements and a statement of outstanding loan balances. The sale agreement and the land registry extract (nesach tabu) are submitted once the property is known.
How much you can borrow: the financing ratio by type of apartment
Beyond the repayment ratio, the Bank of Israel limits the financing ratio, meaning the ratio between the loan and the value of the property. The limit depends on the buyer’s status in the transaction:
| Type of purchase | Maximum financing ratio | Minimum equity |
|---|---|---|
| Single apartment | 75% | 25% |
| Replacement apartment (upgrading your home) | 70% | 30% |
| Additional or investment apartment | 50% | 50% |
| Any purpose loan secured by property | 50% | Not applicable |
Three practical notes. First, the financing ratio is measured against the value of the property being bought, and if the bank’s appraiser values the apartment below the transaction price, the maximum loan will be calculated on the lower valuation. Second, the definition of a single or replacement apartment relies on a declaration filed with the Israel Tax Authority as part of purchase tax, so it is worth understanding in advance. We explained it in our guide to purchase tax in 2026. Third, the loan term is limited to 30 years at most.
Homeowners upgrading who buy before they have sold are in a particularly complex position: the financing ratio is lower, and bridge financing is sometimes needed until the existing apartment is sold. We covered the considerations of selling before or after buying in our guide for homeowners upgrading.
Mortgage tracks and the standard mixes in the preapproval
A mortgage preapproval does not present a single interest rate but a mix of tracks. To read it correctly you need to know the main tracks:
- Fixed rate, unlinked: the rate and the payment are known in advance for the entire term. The initial rate is usually higher, and early repayment may incur a fee if market rates have fallen since the loan was taken.
- Fixed rate, linked to the CPI: a fixed rate, but the principal is adjusted to the consumer price index. The initial monthly payment is lower, and the risk is inflation over the years.
- Prime: a variable rate derived from the Bank of Israel rate plus 1.5%, with a margin set by the bank on top. The payment changes with every rate decision, and you can repay early without a capitalization fee.
- Variable every five years: linked or unlinked, with the rate reset at each change point according to an anchor set in the contract.
Under Bank of Israel rules, the variable rate portion is limited to two thirds of the total loan, so that at least one third is at a fixed rate. To make comparison between banks possible, banks are required to present three standard mixes in the preapproval alongside a tailored offer:
- 100% fixed rate, unlinked.
- 50% fixed rate unlinked and 50% prime.
- One third fixed rate unlinked, one third prime and one third variable linked.
The standard mixes are a comparison tool, not a recommendation. The right comparison between banks is standard mix against the same standard mix, followed by a look at the total cost over the entire term and not only the first payment. The rates in the preapproval are a starting point for negotiation, and a second bank will often improve its offer when shown a preapproval from another bank.
Buyers in new projects also encounter developer financing offers, such as subsidized interest or a 20/80 payment structure. These are no substitute for a bank preapproval, and we set out the differences in our article on developer financing offers.
A worked example: mortgage preapproval in Israel for an apartment in Ramat Aviv Gimel
This example is for illustration only. The average interest rate chosen, 4.8% a year, is a working assumption for the calculation and not an offer from any bank.
A couple is buying a four room apartment in Ramat Aviv Gimel for ₪5,200,000. It will be their only apartment.
- Maximum financing by financing ratio: 75% of ₪5,200,000, which is ₪3,900,000. If the bank’s appraiser values the apartment at ₪5,000,000, the ceiling drops to ₪3,750,000.
- Purchase tax on a single apartment: about ₪155,500, according to the 2026 brackets (3.5% on the portion between ₪1,978,745 and ₪2,347,040, and 5% on the portion above that up to the price of the apartment).
- The loan the couple requests: ₪2,600,000, which is 50% of the price. The equity required is ₪2,600,000, plus purchase tax, legal fees and brokerage fees.
| Scenario | Estimated monthly payment | Net income required at a 40% repayment ratio |
|---|---|---|
| ₪2,600,000 over 25 years | about ₪14,900 | about ₪37,250 |
| ₪2,600,000 over 30 years | about ₪13,640 | about ₪34,100 |
| ₪3,900,000 over 30 years | about ₪20,460 | about ₪51,150 |
What the table shows. Full financing of 75% requires net income of about ₪51,000 a month to stay below 40%, and even at the absolute cap of 50% an income of about ₪41,000 is still needed. In other words, for most buyers in the more expensive neighborhoods of north Tel Aviv, the limiting factor is the repayment ratio, not the financing ratio. Extending the term from 25 to 30 years lowers the payment by about ₪1,260 a month, but increases the total interest over the life of the loan. This is exactly the calculation worth doing before you set a price range, not after you have fallen in love with an apartment.
From preapproval to final approval: appraisal, documents and what can go wrong
Once an apartment has been found and a sale agreement signed, the bank moves on to examining the property. Three points at which deals get stuck:
- An appraisal below the transaction price: the loan is calculated on the lower value, and the difference must come from equity. In neighborhoods with few comparable sales, such as certain streets in Tzahala or private houses in Ramat HaSharon, the gap between the appraiser and the market price can be noticeable. A professional property valuation before making an offer reduces the surprise.
- The legal status of the property: cautionary notes (he’arot azhara), liens, building violations or rights not registered at the Land Registry (tabu) may delay or reduce the financing. We set out these checks in our guide to checks before buying an apartment.
- A change in personal circumstances: changing jobs, taking unpaid leave or taking out a new loan between the preapproval and final approval can change the picture. It is best to avoid such changes during this period.
Before the loan is granted, the bank also requires life insurance for each borrower and structural insurance for the property, and a mortgage, or an undertaking to register one, must be recorded in the bank’s favor. The file opening fee is capped by law at ₪360. It is worth coordinating the payment schedule in the sale agreement with the date the loan is disbursed, so that a payment funded by the mortgage does not fall due before the money has been released.
Common mistakes to avoid
- Calculating the budget by financing ratio alone: 75% sounds like the decisive number, but it is usually the repayment ratio that limits the loan amount.
- Forgetting related costs: purchase tax, legal fees, brokerage fees, renovation and moving come out of equity, not the mortgage.
- Settling for one bank: a preapproval is free of charge, and comparing two or three banks is the simplest tool for improving the rate.
- Comparing the first payment rather than the total cost: a linked track can look cheap in the first month and turn out far more expensive over twenty years.
- Signing before the appraisal is known: when the price is high relative to recent sales on the street, it is worth understanding the appraisal risk in advance and addressing it in the wording of the agreement together with your lawyer.
Frequently Asked Questions
How long is a mortgage preapproval valid?
The terms and rates in the preapproval bind the bank for 24 days from the date it is issued, provided the information supplied has been verified. After that date you can usually request an extension or an updated preapproval, and the rates may change.
Does a preapproval cost money?
No. A preapproval is issued free of charge. The file opening fee, capped by law at ₪360, is charged at a later stage, when you move on to a full application.
Can I get a preapproval before I have found an apartment?
Yes, and that is the recommended order. You apply on the basis of your price range and equity, and update the preapproval once the property is known. The sale agreement and the land registry extract are submitted at that stage.
What is the difference between a preapproval and final approval?
A preapproval relies on the personal information you have provided. Final approval is granted after the bank has examined the property itself, including the appraisal, the legal status and the sale agreement. A low appraisal or a problem with the registration of rights can reduce the final amount.
What is the maximum mortgage repayment ratio?
Under Bank of Israel directives, a bank will not approve a mortgage when the monthly payment exceeds 50% of disposable income. Above 40% the terms usually become stricter, which is why most buyers plan the loan below that level.
How much equity do I need to buy an apartment?
For a single apartment at least 25% of the property’s value, for a replacement apartment 30%, and for an additional or investment apartment 50%. On top of that come purchase tax and related costs, which are not financed by the mortgage.
Before you start searching
A mortgage preapproval is the first step of a sound purchase: it turns an estimated budget into a known one, and a buyer who knows their numbers negotiates with more calm. RS Nadlan accompanies clients in buying apartments and houses in Tel Aviv, Ramat HaSharon, Herzliya, Ra’anana and Kfar Saba, with a specialization in the neighborhoods of north Tel Aviv, and knows the price levels on every street well. If you are getting organized, you can browse our properties for sale or get in touch and arrange a meeting at our offices in Ramat Aviv Gimel. Phone: 077-500-4600 (from abroad, +972 77 500 4600). Financing and tax decisions in any specific case should be reviewed with a mortgage advisor, a lawyer or a tax advisor.
