Israel tightens mortgage rules: who banks will refuse from October 1

Starting October 1, 2026, new restrictions on mortgage lending come into effect in Israel. Banks will consider the total debt burden of the borrower across all housing obligations. If monthly payments exceed 50% of the household's net income, the bank cannot approve a new mortgage. Also under consideration is a limit where only 50% of the income of parents acting as co-signers will be taken into account when assessing solvency.

Starting October 1, 2026, new restrictions on mortgage lending come into effect in Israel, introduced by the Bank of Israel. The main change: banks will be required to consider the total debt burden of the borrower across all their housing obligations, not just payments on the new mortgage. If the total monthly payments exceed 50% of the household's net income, the bank cannot approve a new loan. The actual threshold may be lower—35–40% of income—due to banking supervision requirements for additional capital. For example, with a family net income of 20,000 shekels and an internal bank limit of 40%, the allowable payment amount would be 8,000 shekels. If the family is already paying 5,000 shekels on another loan, only 3,000 shekels remain for the new mortgage. The Bank of Israel is also preparing an additional restriction for schemes involving parents as co-signers: only 50% of their income will be considered when assessing solvency. This could significantly reduce the size of available mortgages for young families. The new rules are being introduced against the backdrop of a sharp increase in mortgage lending volumes: in the first eight months of 2026, banks issued loans worth 80 billion shekels, and the annual volume could reach 120 billion shekels, exceeding the figures for 2021 and 2022.