Discounted apartment (דירה בהנחה, formerly "Mechir Lamishtaken") is a government program in which eligible buyers purchase a new apartment from a contractor at a reduced price after winning a lottery. Mortgages in the program have a few special rules.
Financing is calculated by value, not by the discounted price
In the program, the bank may calculate the financing ratio according to the market value of the apartment (according to an appraisal and subject to a ceiling set in the directives), not only according to the reduced price you paid. So the equity required is sometimes less than 25% of the price you paid. However, the program usually requires a minimum equity of a fixed amount. According to professional publications, the value ceiling for this calculation was updated during 2026, so check the current figure with the bank.
Payments during construction
The apartment is not built yet, so you pay the contractor in stages. The bank transfers the mortgage money according to the payment schedule. During construction you sometimes pay only interest on the amount already drawn.
The construction inputs index
Payments to the contractor are usually linked to the construction inputs index, in accordance with the law and the contract. A rise in the index makes the apartment more expensive. Buying from a contractor
Risks to watch
- Construction delays – you will pay rent and interest at the same time.
- Rate changes between the approval in principle and the actual drawdown.
- Equity for the first payment – it needs to be available on time.
More: how much equity you need, contractor financing deals.