Aliyah Benefits for Mortgages in Israel
Making Aliyah opens doors to exclusive mortgage benefits that can save tens of thousands of shekels on your first Israeli home purchase.
The Israeli government offers three major financial advantages to new immigrants: subsidized mortgage rates through the Zakaut program, dramatically reduced purchase taxes, and preferential banking terms. Understanding and accessing these benefits can make the difference between affordable homeownership and financial strain during your crucial first years in Israel.
The Zakaut Mortgage Program: Your Primary Government Subsidy
The Zakaut mortgage represents Israel’s most valuable housing benefit for new immigrants.
offering Mortgage interest rates calculated as the Bank of Israel’s base rate minus 0.5% with a maximum cap of 3%. Saving thousands of shekels annually with no prepayment penalties.
The program operates through seven authorized banks and functions as a fixed, inflation-linked loan for 4-30 years.
The Zakaut program supplements rather than replaces conventional financing, so most property purchases require combining your subsidized Zakaut loan with a regular mortgage to reach total financing needs.
Significant Purchase Tax Reductions for new Olim
In a major policy update for 2024-2025, Israel dramatically expanded purchase tax benefits for new immigrants, creating unprecedented savings opportunities.
Under the new structure, olim pay zero purchase tax on the first ₪1,978,745 of their property’s value
On the next tier, from ₪1,978,745 to ₪6,000,000, new immigrants pay only 0.5% tax, while regular buyers pay significantly higher rates.
This recent change represents one of the most substantial housing incentives Israel has ever offered new immigrants. Consider a family purchasing a ₪3,000,000 property: under the new rates, they pay approximately ₪5,106 in purchase tax, creating savings that typically exceed ₪90,000 compared to regular buyers.
The benefit remains available for seven years from your Aliyah date and can be applied retroactively if you purchased property up to one year before making Aliyah, with tax authorities refunding the difference between what you paid as a foreign buyer versus an oleh.
Important qlarifications
Property Value Limit: The purchase tax benefit applies only to properties valued up to ₪20,183,565. Purchases exceeding this amount are not eligible for the discounted tax rates.
Single Residence Requirement: The benefit is available only for the purchase of a single residential property. Olim purchasing additional properties will not be eligible for the reduced tax rates.
Retroactive Application: For properties purchased up to one year before making aliyah, the construction period is excluded from the one-year prior to entry timeframe, provided the period between the purchase date and the oleh’s initial entry does not exceed three years, and the oleh secures an oleh permit within one year of the purchase date.
Banking Advantages and Enhanced Access
New immigrants receive preferential treatment from Israeli mortgage banks that extends well beyond the Zakaut program. Most significantly, olim can access up to 75% financing on their first property purchase—the same loan-to-value ratio available to Israeli citizens, compared to just 50% typically offered to foreign residents.
Israeli banks employ English-speaking mortgage specialists who understand olim’s unique challenges, including foreign income documentation and combining Zakaut benefits with regular mortgages. Banks also often show more flexibility with life insurance requirements, sometimes waiving them or allowing alternative arrangements.
Given these nuances, working with an English-speaking Israeli mortgage advisor can be crucial, ensuring you understand the bank’s requirements, optimize your financing, and avoid costly mistakes during the mortgage process.
Navigating the Application Process
Success requires obtaining a Teudat Zakaut (Entitlement Certificate) using your Teudat Oleh, documentation proving no previous Israeli property ownership, and standard paperwork.
The 30-60 day process should begin early in your house-hunting timeline.
You can obtain your Teudat Zakaut from any of the seven authorized banks and transfer it to another authorized bank if they offer better regular Israeli mortgage terms . Most successful applicants apply for both Zakaut and regular mortgages simultaneously to ensure coordinated closing.
Common pitfalls include starting too late, underestimating document gathering time, and missing retroactive tax benefit deadlines. Complex international financial situations particularly benefit from professional guidance to avoid costly delays.
Real Savings Example
Consider an American family purchasing an apartment in Modiin for $2,800,000 through proper benefit application.
Their purchase tax savings total approximately ₪93,650 compared to regular Israeli buyers.
On the mortgage side, the family may also benefit from reduced interest rates on part of their financing due to eligibility for Zakaut benefits.
While the exact amount depends on several factors and typically applies to a portion of the mortgage, these lower rates can translate into meaningful annual savings, which accumulate over time
Eligibility Requirements and Timing
The Zakaut mortgage program maintains a fifteen-year eligibility window from your official Aliyah date, while purchase tax benefits operate on a seven-year timeline.
Both programs are strictly limited to your first property purchase in Israel, and married couples must have both spouses meet individual eligibility requirements.
The requirement for no previous Israeli property ownership is strictly enforced, including any form of direct or indirect ownership interest through companies or trusts. Military service time doesn’t count against these eligibility windows, recognizing that some immigrants may delay property purchases while fulfilling service obligations.
Your Next Steps
Begin by confirming your Aliyah date and calculating remaining timeframes for both Zakaut and purchase tax benefits. Contact one or more authorized banks to start your Teudat Zakaut application, even before identifying a specific property—the Israeli real estate market moves quickly, and pre-arranged financing provides significant negotiation advantages.
Gather required documentation early, as international document requirements can be time-consuming. Consider consulting with professionals specializing in olim real estate services, particularly if you have complex financial situations involving multiple countries.
The mortgage benefits available to new immigrants represent one of Aliyah’s most valuable financial advantages. With proper planning and execution, these programs can save tens of thousands of shekels while providing access to homeownership that might otherwise prove financially challenging. Take advantage of these opportunities while you’re eligible—they represent not just immediate savings, but an investment in your successful integration as an Israeli resident.
Your English Speaking Mortgage broker in Israel
Erez Shemesh is a professional mortgage broker specializing in helping English-speaking clients navigate Israel’s complex mortgage system. As a certified mortgage consultant and member of the Israeli Mortgage Advisors Association, Erez works exclusively for his clients to secure the best possible mortgage terms, often saving them tens of thousands of shekels. He provides transparent guidance and ensures clients fully understand every aspect of their mortgage agreement before signing. Whether you’re a new immigrant, foreign resident, or Israeli citizen seeking professional mortgage consultation in English, contact Erez at +972 54-8600447.
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