# The Cash You Actually Need > Israeli banks cap non-resident mortgages at fifty percent of the lower of price or appraisal, and that fifty percent is a ceiling, not a promise. The gap you must wire from abroad is larger than the headline LTV suggests. Canonical: https://shavnu.com/blog/what-your-equity-covers --- **Published:** 2026-08-20 **Category:** buying **Reading time:** 9 minutes **Projects covered:** RAINBOW Tel Aviv, DIMRI YAMA TLV ## Who Counts as a Foreign Buyer for the Bank Bank of Israel Proper Bank Management Directive 329 governs how much a bank may lend against residential property. Its definition of a foreign resident is binary: anyone who is not an Israeli citizen. There is no intermediate category in this rule for a frequent visitor, a returning expatriate without citizenship, or a holder of an Israeli residence permit alone. Property bought by a foreign resident under Directive 329 is automatically classified as an investment property for lending limits, even if you intend to live in it. That classification matters because Israeli citizens buying a sole or first home can reach seventy-five percent loan-to-value, and seventy percent for a replacement home. The non-resident ceiling is lower and the bank's discretion is narrower. The site's financing and purchase-tax guides own the overview of tracks, brackets, and paperwork. This article focuses on one angle: the total cash you must have available before signing, not the maximum the bank might lend. ## Fifty Percent Is a Ceiling, Not an Entitlement Banks may not exceed fifty percent LTV for a non-resident, measured against the contract price or the appraiser's valuation, whichever is lower. If you agree to pay ₪10 million but the appraiser values the apartment at ₪9.5 million, the fifty percent cap applies to ₪9.5 million, not to your enthusiasm. The fifty percent figure is a regulatory ceiling, not a promise. Individual banks may offer forty to forty-five percent depending on country of residence, complexity of income, and absence of an Israeli credit history. A file that looks strong on paper can still receive a lower offer after underwriting. Non-bank lenders are not bound by Directive 329 and market supplementary second-charge loans. Treat claims of very high combined financing sceptically. They are not ordinary, and they are not riskless. ## Payment to Income and the Fixed Track Regulations prohibit a monthly mortgage repayment above fifty percent of disposable income. In practice banks aim for thirty to forty percent to avoid holding extra capital against a high-risk file. A non-resident with income earned abroad will still be stress-tested in shekels at Israeli rates. An Israeli mortgage is assembled from several tracks into one payment rather than being a single fixed rate for the whole loan. At least one third of the loan must be on a fixed track. As of 25 May 2026 the Bank of Israel base rate was 3.75% and Prime was 5.25%. Your payment therefore mixes exposed and fixed components from day one. Passing the income test does not expand the LTV cap. You can afford the payment on paper and still be required to bring more equity because the directive limits the loan amount independently of affordability. ## The Equity Trap The bank lends on the lower of price or appraisal. It will not finance purchase tax, legal fees, or appraisal costs. It is forbidden from lending the buyer their own equity. Those rules stack. A non-resident therefore needs the gap between the full purchase price and the approved loan, plus all transaction costs, in cash from overseas funds. The gap is not "fifty percent of the price" in a simple headline sense. It is the price minus what the bank actually approves, and the bank's approval is capped at fifty percent of the lower number. Many remote buyers complete purchase and mortgage entirely on a notarised and apostilled power of attorney where they cannot sign in person. The cash still has to exist in a traceable form before the bank releases funds. > The bank will not finance purchase tax, legal fees, or appraisal. It may not lend you your own down payment. ## An Arithmetic Example Take a contract price of ₪10 million on a presale apartment. The bank's appraiser values the unit at ₪9.5 million. The regulatory cap is fifty percent of ₪9.5 million, which is ₪4.75 million of loan. You must cover ₪10 million minus ₪4.75 million, which is ₪5.25 million, from your own funds before fees and tax. If the bank offers only forty-five percent LTV instead of the full ceiling, the loan becomes forty-five percent of ₪9.5 million, which is ₪4.275 million. Your equity need rises to ₪5.725 million on the same contract. On top of that equity gap you pay mas rechisha (מס רכישה, purchase tax) calculated on the contract price, lawyer fees, appraiser fees, and currency conversion costs. None of those appear in the LTV ratio. The financing guide and purchase-tax guide explain those lines. This example stops at the trap: the wire transfer is larger than "half the apartment." **Illustrative non-resident cash need on a ₪10M contract (appraisal ₪9.5M)** | Item | Amount | Bank financed? | | --- | --- | --- | | Contract price | ₪10.0M | Partially | | Appraisal used for LTV | ₪9.5M | No | | Loan at 50% of appraisal | ₪4.75M | Yes | | Equity gap on price | ₪5.25M | No | | Loan at 45% of appraisal | ₪4.275M | Yes | | Equity gap at 45% LTV | ₪5.725M | No | | Purchase tax, legal, appraisal | Adviser calculates | No | _Directive 329 caps and equity-trap rules from the research corpus. Tax and fees are not quantified here._ ## A Recorded Sde Dov Deal, Same Logic Calcalist reported Israel Canada's average closed RAINBOW deal at ₪11 million in Q2 2025, with 234 units sold for ₪2 billion. That is a recorded deal average, not an asking price on a brochure. Apply the same mechanics: if the appraisal lands below ₪11 million, the fifty percent cap applies to the lower figure. At a hypothetical appraisal equal to the deal price, fifty percent LTV implies ₪5.5 million of loan and ₪5.5 million of equity before tax and fees. At forty-five percent LTV the loan falls to ₪4.95 million and equity rises to ₪6.05 million. Dimri's published floor of ₪3.75 million for a two-room unit at DIMRI YAMA lowers the absolute shekel amounts, but the percentage logic is identical. Higher list price per square metre does not change the directive. Nadlan Center reported in April 2026 that Dimri's Sde Dov price per square metre leads the district. The bank still measures LTV on appraisal, not on marketing superlatives. ## What the Bank Will Ask For Source-of-funds documents, a foreign credit report, overseas bank statements, notarised translation of non-Hebrew documents, and the power of attorney structure described above are standard expectations in the corpus. Banks trace money into Israel under anti-money-laundering rules. A reservation deposit paid outside the lawful presale security system is a separate risk, covered in the off-plan protection article. Currency matters at approval time. Underwriting uses shekel exposure. A buyer whose income and assets sit in dollars, euros, or pounds needs a clear conversion plan for both the equity gap and the ongoing payment. The file does not specify exact document lists per bank. Expect variance. The constant is that equity must be real, traceable, and unavailable to be borrowed back from the same lender. ## How This Differs From the Guides The financing guide explains tracks, typical bank behaviour, and the power-of-attorney path. The purchase-tax guide explains mas rechisha brackets and timing. This post is the sum line: total cash before you treat fifty percent LTV as "half and finance the rest." Do not double-count. Purchase tax is not part of the mortgage. Legal fees are not part of the mortgage. The appraisal fee is not part of the mortgage. The equity trap closes when you add those to the gap the LTV calculation already forced. If a broker promises eighty percent combined financing through stacked products, ask which slice is a regulated first mortgage under Directive 329 and which is a second charge from a non-bank lender at a different risk level. The cash you actually need starts with the regulated slice, not the headline. --- Source: https://shavnu.com/blog/what-your-equity-covers on Shavnu, an independent English guide to the Sde Dov district in Tel Aviv. Figures come from the public record: Israel Tax Authority transaction reports, Tel Aviv GIS, tender results and the Hebrew press.