The financing ratio (LTV – Loan To Value) is the ratio between the mortgage amount and the value of the property. The Bank of Israel sets a ceiling on this ratio, by type of purchase, in Proper Conduct of Banking Business Directive 329.
The ceilings
| Type of purchase | Maximum financing | Minimum equity |
|---|---|---|
| Single (only) apartment | 75% | 25% |
| Replacement apartment (upgraders) | 70% | 30% |
| Additional apartment / investment | 50% | 50% |
| Any-purpose loan against a property | 50% | – |
How is "value" measured?
The bank calculates the financing ratio against the lower of the purchase price and the appraised value. If you bought for NIS 2,000,000 and the appraiser valued the apartment at NIS 1,900,000, the 75% is calculated on 1,900,000. That means a mortgage of up to NIS 1,425,000, not 1,500,000.
What is a "replacement apartment"?
Upgraders who commit to selling their current apartment within a defined period receive financing of up to 70%. Those who do not sell are treated as buyers of an additional apartment, with financing of up to 50%.
Existing loans on the same property
The financing ratio also includes the balances of other loans secured by the same property. In other words, you cannot "bypass" the limit with an additional loan on the same apartment.
Is there a way to get more?
Discounted apartments under government programs have special rules. Beyond that, the Bank of Israel limits bind all banks. Anyone offering "100% financing" usually does it by combining additional loans, which are worth checking very carefully before you commit.
Quick calculation: equity calculator (in Hebrew).