Buying a home can be one of the biggest financial decisions new olim make after arriving in Israel — and understanding a new mortgage system can make the process even more daunting.
Revital Ackerman, a personal Aliyah advisor at the Ministry of Aliyah and Integration, breaks down some of the most important things new immigrants should know before approaching a bank, choosing a mortgage or committing to a property.
Buying a home in Israel: 10 things new olim should know before taking a mortgage
(Video: Daniel Kampus)
1. Check whether you're eligible for a subsidized loan
Before approaching a bank, check whether you qualify for a mortgage loan subsidized through the Ministry of Housing. Eligibility may give new olim access to different financing terms.
2. Don't assume the government option is automatically the best one
Being eligible does not mean you have to use the benefit. Check the conditions and compare them with the alternatives available to you before deciding which route makes the most financial sense.
3. Check the early repayment conditions
One potential advantage of an eligibility loan is that it can be repaid early without an early repayment penalty. This may be important if you expect your financial circumstances to change in the future.
4. Prepare your documents
When applying for eligibility, you will need to provide documentation. This includes, among other things, your Israeli ID card and immigration certificate. Preparing the paperwork in advance can help make the process smoother.
5. Understand how much financing you can receive
When purchasing a single home, buyers can generally receive financing of up to 75% of the property's value. That means you will need to bring a significant amount of your own equity to the purchase.
6. Remember that the down payment isn't your only expense
The price of the property is only part of the calculation. New homeowners should also prepare for additional expenses such as legal fees, brokerage fees and renovations.
These costs should be included in your budget before deciding how much you can afford to spend on a home.
7. Be ready to prove you can repay the mortgage
New olim, like other borrowers, must demonstrate their ability to repay the loan. Banks may ask for proof of income, bank statements and details of existing financial commitments.
8. Income from abroad may count
If you have recently arrived in Israel and do not yet receive an Israeli salary, that does not necessarily rule out a mortgage.
Income from abroad may also be taken into consideration, subject to the bank's requirements and the appropriate supporting documentation.
9. Don't borrow based only on what the bank offers you
The maximum amount a bank is prepared to lend is not necessarily the amount you should borrow.
Look carefully at the expected monthly repayment and ask yourself whether you can comfortably afford it over time, alongside your other household expenses and financial commitments.
10. Get preliminary approval — and shop around
Ask for preliminary mortgage approval before making a final decision, and compare offers from several banks.
Interest rates and mortgage conditions can vary, and even a seemingly small difference in the terms could translate into a substantial amount of money over the years.
For new olim, buying a home is about much more than finding the right property. Understanding your eligibility, knowing how much cash you need, preparing the right documents and comparing financing options can help turn one of the biggest financial decisions of your Aliyah journey into a much more informed one.