The mashkanta (משכנתא) is the Israeli mortgage loan. If the word is unfamiliar to you, how it works will surprise you even more: unlike the French mortgage loan — one fixed rate, one stable monthly payment, that's settled — the mashkanta is a puzzle that you assemble yourself from several "tracks" (tranches), each with its own rate, its own indexation and its own risks.
Well negotiated, this flexibility is an advantage. Poorly understood, it can cost you tens of thousands of shekels over the life of the loan. This guide explains how it works, how much you can borrow, and how to get the best terms.
📖 This article is part of the Ultimate Guide to Real Estate in Israel
What is the mashkanta?
The mashkanta is a mortgage loan secured by the real estate property you are buying. The bank registers a mortgage (mashkon) on the property at the Tabu or in the corresponding registry, and this mortgage remains active until the loan is fully repaid.
The Israeli particularity is that your loan is not composed of a single line of credit. It is divided into several tranches called "masloley mashkanta" (mashkanta tracks). Each track has its own rate mechanism, and it's the combination of these tracks that determines the total cost of your borrowing.
The Bank of Israel imposes rules on the distribution between track types. You cannot put 100% in variable rate, for example. The idea is to protect borrowers against excessive fluctuations.
The different types of tracks
Understanding tracks is the key to negotiating a good mashkanta. Here are the main ones:
Non-indexed fixed rate (Kavua Lo Tzamoud)
The rate is fixed for the entire duration of the loan and the monthly payment never changes. This is the formula closest to what we know in France. It offers total security but the initial rate is generally the highest of all tracks. It's the choice for those who want to sleep peacefully.
Inflation-indexed fixed rate (Kavua Tzamoud Madad)
The rate is fixed, but the remaining principal is revalued each month according to the consumer price index. If inflation rises, your debt increases — and with it your monthly payments. The initial rate is lower than non-indexed fixed, but the final cost depends entirely on inflation developments. In periods of high inflation, this track can become very expensive.
⚠️ Warning: Inflation in Israel has experienced recent peaks. An indexed track that seems advantageous on paper can double in cost if inflation remains high for several years. Evaluate your risk tolerance.
Variable rate (Prime)
The rate is based on the Bank of Israel's Prime rate, plus or minus a margin. The Prime fluctuates according to monetary policy. When the Bank of Israel lowers its rates, your monthly payments decrease. When it raises them, they increase. It's the most reactive track to economic conditions.
Advantage: in periods of low rates, it's the cheapest. Disadvantage: unpredictable in the long term. The Bank of Israel limits the Prime portion to a maximum of one-third of your total mashkanta.
5-year variable rate (Mishtana Kol 5 Shanim)
The rate is fixed for a 5-year period, then renegotiated by the bank according to market conditions. It's a compromise between the stability of fixed and the potential savings of variable. But beware: at renewal time, the new rate can be significantly higher, and you have no room to maneuver except to refinance.
How to compose your mashkanta?
In practice, your mashkanta will be composed of 3 to 5 tracks combined. For example:
Track | Loan portion | Indicative rate | Risk |
|---|---|---|---|
Non-indexed fixed | 33% | 5.5 - 6.5% | None |
Inflation-indexed fixed | 33% | 3.0 - 4.0% | Inflation |
Prime | 33% | Prime ± 0.5% | Base rate |
The above rates are indicative and vary according to market conditions, your profile and the bank.
The art of the mashkanta is finding the right balance between security (non-indexed fixed), reduced cost (Prime, indexed), and duration. The more non-indexed fixed you put, the more protected you are but the higher your starting monthly payment. The more variable or indexed you put, the more risk you take but with lower initial monthly payments.
💡 Tip: There's no magic formula. The best composition depends on your personal situation: expected duration of property ownership, risk tolerance, absorption capacity in case of rising monthly payments. A specialized broker can help you model different scenarios.
How much can you borrow?
The Bank of Israel sets strict financing limits (LTV — Loan to Value) according to your profile:
Buyer profile | Maximum LTV | Minimum down payment |
|---|---|---|
Resident — single dwelling (primary residence) | 75% | 25% |
Resident — additional dwelling (investment) | 50% | 50% |
Non-resident / foreigner | 50% | 50% |
Oleh hadash (new immigrant) — first property | 75% | 25% |
Beyond the LTV, the bank evaluates your repayment capacity. The general rule is that your total monthly payments (mashkanta + other credits) must not exceed 40% of your net income. Some banks are stricter, others more flexible depending on the file.
The maximum duration is 30 years, but most loans are contracted over 15 to 25 years. The longer the duration, the higher the total cost, but the monthly payments are more manageable.
⚠️ Crucial reminder: In Israel, there is no loan contingency clause. If you sign a purchase contract and the bank refuses your mashkanta, you are still committed. Always obtain a preliminary agreement BEFORE signing.
Banks that offer mashkantaot
All major Israeli banks have a mashkantaot department. The main ones are:
Bank Hapoalim — the country's largest bank, often considered competitive on rates.
Bank Leumi — historically strong in the mortgage market, with an extensive network.
Discount Bank — sometimes more aggressive on conditions to attract new clients.
Mizrahi Tefahot — real estate credit specialist, often cited as the reference bank for mashkantaot.
Bank Yahav / Bank Igud — smaller banks that can offer interesting conditions for certain profiles.
Each bank offers its own rate schedules, and the gaps between them can be significant. On a loan of 1.5 million shekels over 20 years, a 0.3% rate difference represents tens of thousands of shekels.
💡 Golden rule: Never take the first offer. Consult at least 3 banks. Competition is your best negotiating lever.
Mashkanta broker: useful or not?
The yaats mashkantaot (mashkanta advisor) is an independent broker who negotiates with banks on your behalf. Their role is to compare offers, negotiate rates, and compose the best track structure for your profile.
The advantages: they know the current rate schedules of each bank, know which banks are in client acquisition phase (and therefore more flexible), and can save you much more than their fees. They also handle all the administrative part, which represents considerable time savings.
The cost: a broker's fees are generally between 3,000 and 8,000 shekels, depending on the loan amount and file complexity.
When it's essential: if you are a non-resident, if it's your first purchase in Israel, if you don't speak Hebrew, or if your file is atypical (foreign income, self-employed, dual nationality). In these cases, the broker is not a luxury but a necessity.
When you can do without: if you've been a resident for a long time, you speak Hebrew, you already have an established banking relationship, and you're comfortable with financial negotiations. Even in this case, getting a quote from a broker as a comparison point is always wise.
Required documents
To build a mashkanta file, the bank will ask you for:
For resident employees: identity document (teudat zehout), last 3 pay slips (tlushey maskoret), bank statements from the last 3 months, tax assessment (shomey mas), and the signed sales contract (or a preliminary project if the bank gives a preliminary agreement before signing).
For self-employed: the same documents plus accounting statements from the last 2 years and turnover declaration.
For non-residents: passport, translated and certified income statements (pay slips or tax assessments from country of origin), bank statements, and sometimes an attestation from your bank abroad. The process is longer because the bank must verify foreign documents.
For olim hadashim: teudat oleh in addition to standard documents. Oleh status may open entitlement to preferential conditions at certain banks.
💡 Tip: Prepare your file in advance. A complete file from the first appointment considerably accelerates the process. The bank generally takes 2 to 4 weeks to give a definitive agreement.
Mashkanta-related fees
Beyond monthly payments, the mashkanta involves several fees to anticipate:
Fees | Typical amount | When |
|---|---|---|
Bank file opening | 0.25% of loan (negotiable) | At setup |
Property appraisal (shmaï) | 1,500 — 3,000 ₪ | Before agreement |
Mortgage registration | ~1,000 ₪ | After signing |
Broker (if used) | 3,000 — 8,000 ₪ | At setup |
Borrower life insurance | Variable (monthly) | Throughout duration |
Home insurance | Variable (annual) | Mandatory |
The file opening fee is almost always negotiable. It's often the first point the broker attacks in negotiation.
Early repayment: what you need to know
You can repay your mashkanta early, in whole or in part. But beware: each track may include different early repayment penalties (knass piraon mukdam).
The Prime track generally has no penalty, making it the most flexible. Fixed rate tracks can incur significant penalties if market rates are lower at the time of repayment (the bank loses the spread). Indexed tracks have their own calculation formulas.
If you're considering selling the property in a few years, or if you think you'll receive money (inheritance, sale of another property), integrate this possibility into your track composition. Put a larger portion in Prime to maintain flexibility.
Common mistakes to avoid
Signing the purchase contract without a preliminary agreement. We can't repeat it enough. No contingency clause in Israel. If the bank refuses, you're stuck.
Accepting the bank's first offer. Posted rates are starting points, not final prices. Everything is negotiable, especially if you arrive with a competing offer from another bank.
Putting too much indexed during high inflation periods. The low starting rate is tempting, but if inflation remains high for 5-10 years, the total cost can explode.
Neglecting borrower life insurance. The bank requires it. But you're not obliged to take it from them. Compare offers from external insurers — the savings can be substantial over the duration.
Forgetting to budget for ancillary fees. The appraisal, file opening, mortgage registration — these are thousands of shekels on top of your down payment.
Summary: mashkanta steps
# | Step | Duration |
|---|---|---|
1 | Prepare your file (income, statements, identity) | 1 week |
2 | Consult 3+ banks or a broker | 1 to 2 weeks |
3 | Obtain a preliminary agreement | 1 to 2 weeks |
4 | Sign the purchase contract (with your lawyer) | — |
5 | Transmit the contract to the bank | Immediate |
6 | Property appraisal by an expert (shmaï) | 1 week |
7 | Bank's definitive agreement | 1 to 2 weeks |
8 | Signing at the bank + fund release | 1 week |
Total duration: allow 4 to 8 weeks between the first step and fund release. This is why you must start the process as soon as your purchase project materializes, not on the day of contract signing.
Also read
👉 Back to the Ultimate Guide to Real Estate in Israel
👉 The purchase process — the 8 essential steps
👉 The Mashkanta — financing your purchase in Israel
👉 Taxation — mas rechisha, mas shevach, arnona
👉 The best cities to invest in Israel
👉 Buying off-plan — new projects, Tama 38
👉 The 10 pitfalls to avoid in Israeli real estate
Simulate your mortgage on immobilier.co.il →
The rates and conditions mentioned in this article are indicative and subject to variation. Consult a broker or your bank for updated conditions. Last updated: March 2026.
immobilier.co.il — The real estate portal in Israel since 2004.
