Combining US and Israeli Financing for an Israeli Home
Combining US and Israeli Financing for an Israeli Home
Israeli banks usually finance a smaller share of the price for foreign residents than for local buyers. To bridge the gap, some Americans draw on financing in the United States, such as a home equity line, a cash-out refinance of an American property or a loan secured by an investment portfolio, and combine it with an Israeli mortgage. Others use only US financing and buy in Israel without a local loan. Each approach carries different currency exposure, costs and risks. This guide explains how the pieces fit together, what Israeli lenders think about borrowed down payments and which questions to take to your advisors before you commit.
Why Buyers Combine Sources
The main reason is the limit on how much Israeli banks will lend to foreign residents. A buyer with substantial equity in a US home but limited liquid savings may use that equity for the down payment. Others prefer to borrow in dollars because their income is in dollars and they are more familiar with US lending.
Common US Financing Tools
Buyers mention home equity lines of credit, cash-out refinances of an existing US home and securities-based lending against a brokerage account. Each has its own cost structure, risks and conditions. A line secured on your US home puts that home at risk if you cannot repay, and portfolio loans can be called if markets fall.
US lenders will not usually lend against the Israeli property itself, so the security remains in the United States.
Home equity line on a US residence
Cash-out refinance of a US property
Loans secured on investment accounts
Personal or business credit, used with caution
How Israeli Lenders View a Borrowed Down Payment
Israeli banks want to understand where the equity comes from. If part of it is borrowed, the bank will include those repayments when assessing affordability, and some banks may limit the loan as a result. Hiding the source is not an option, since source of funds checks will reveal it and could jeopardize the mortgage.
Tell your mortgage advisor exactly how the down payment is being funded so they can approach banks that are comfortable with the structure. Some banks treat a secured US loan more favorably than unsecured credit, and your advisor will know how different lenders tend to respond.
Two Currencies, Two Sets of Payments
With a dollar loan in the United States and a shekel mortgage in Israel, you will have payments in two currencies, possibly on different schedules and with different rate behavior. The dollar debt is matched to dollar income, while the shekel mortgage is matched to a shekel asset. Understanding how these balance each other is central to the decision.
Costs and Complexity
Combining sources means two sets of fees, two applications and two lenders with their own requirements. Timing becomes important, because the US funds must be available and transferred before the Israeli payments fall due, and the Israeli mortgage must be approved before its tranche is needed. Build a timeline with your advisors. A simple table listing each payment due under the Israeli contract, the source that will fund it and the date the funds must leave the United States can prevent a great deal of last-minute stress.
Risks to Consider
Borrowing against a US home to buy in Israel increases your total leverage. If property values fall in either country, or income drops, pressure can build on both sides. A buyer who keeps a reserve and borrows well within limits is better placed to handle unexpected events.
Who Should Be at the Table
An Israeli mortgage advisor, a US loan officer or financial advisor, an Israeli lawyer, an Israeli tax advisor and a US CPA may all have something to say. Interest deductibility, currency effects and reporting differ between countries and between the types of loan. We do not provide financial or tax advice, but we can help coordinate the property timeline.
Frequently asked questions
Can I use a home equity line for my Israeli down payment?
Many buyers do, but the Israeli bank will want to know and will factor in the repayments. Discuss the structure openly with your mortgage advisor.
Is it cheaper to borrow in the United States or in Israel?
It depends on market conditions in both countries, your credit and the loan type. Compare total costs and currency exposure, not only the headline rate.
Can a US bank lend against my Israeli apartment?
This is uncommon. US lenders usually require security located in the United States.
Does combining loans affect my US taxes?
The treatment of interest and currency effects can vary by loan type and use of funds. Ask your US CPA before you finalize the structure.
Elkayam Group
Rooted in family industry since the forties and now under third-generation leadership, Elkayam Group runs Kobi Elkayam Real Estate Ltd out of Rival Street 37 in Tel Aviv. The company is involved in development, urban renewal, TAMA 38 and pinui-binui, and in combination and complex deals where partner companies can provide guarantees. Its staff, who work in Hebrew, English and French, help American buyers keep financing on both sides of the ocean in step with the purchase.
Contact us to build a purchase timeline that works with your US and Israeli financing.
+972-53-658-4252 · support@kobielkayamrealestateltd.com · Rival St 37, Tel Aviv