Teudat Zakaut Explained – Why You Need One.

There exists a relatively unknown government backed discounted rate mortgage loan, with an extra (up over 40,000 NIS!) benefit to olim, with even extra appeal to those who may not necessarily qualify for the bank’s preferred unlinked fixed-rate mortgages. These loans can range from 80,000-100,000 NIS, and are highest valued from between 5-15 years from the date of aliyah. 

Zakaut (eligibility) mortgage loans are available to married, common-law couples and single parents of any age (single olim over 21, others over 35)who haven’t owned a home in Israel in the past 10 years.

In addition, and perhaps even more exciting, is that the government recently approved two different raffle programs (diyur mufchat) where one may qualify to purchase  specific contractor apartments at a discounted price (up to 400,000 NIS), similar to mechir lemishtaken, or get 100,000 NIS to purchase a house in a peripheral city (with a purchase price of up to 700,000 NIS). To enter the raffle, one requires a teudat zakaut.

Issuing a Zakaut Certificate: 

Obtaining a zakaut certificate is done through the bank for a fixed fee of 70 NIS. This certificate confirms one’s eligibility for the discounted mortgage rate and specifies the amount of eligibility, as well as other conditions and restrictions.

All banks are required to issue a zakaut certificate. People can transfer the zakaut certificate from one bank to another, though there is an additional service charge of 70 NIS for the transfer, and it’s recommended to get it at your issuing mortgage bank since transferring can take time.

Necessary Documents for Olim: 

The sum of the loan is determined by a variety of factors (as explained below), as determined by these documents of the oleh, to be presented to the bank at the time of the application:

  • Teudat Zehut, obtainable at the “Misrad Hapnim”, Ministry of the Interior.
  • Approval of military/national service for each of the purchasers (or proof of exemption or deferment).
  • A joint Teudat Oleh,if married (immigration certificate obtainable at the “Misrad HaAliyah V’Klitah”, Ministry of Aliyah and Integration ).
  • A marriage certificate or marriage registration certificate, if the couple was married in Israel.

Expiration of Zakaut Certificate: 

The certificate is valid for only a year, but it can be renewed a month before the expiration date for up to another year-and-a-half.

Type of Loan: 

  • Index-attached (tzamud lamadad), fixed rate.
  • Available for mortgages of 10 to 30 years, in intervals of 5 years.
  • Rates are at least half a percent lower than the market rate, and no more the 3%.
Length of loan in years1015202530
Current rates1.87%1.89%2.16%2.6%2.77%

How is the Amount of a Mortgage Eligibility Loan Determined:

The eligibility level is calculated in relation to the cumulative score that the borrower(s) receive. The higher the score, the higher the eligibility amount. There are several parameters used to determine the score. They include:

  • Family status.
  • Number of years married.
  • Months of army service/national service.
  • Number of children.
  • Number of brothers and sisters living in Israel.
  • Years post aliyah.

Additional Amount for Olim in Israel for 5+ Years

Families and singles who made aliyah and have been in Israel for 5 years or more will receive an additional loan for their mortgage. This is a 28-year loan at 3%. The loan is determined by the number of years since making aliyah. The minimum is NIS 19,630 for 5-6 years, NIS 28,370 for 7 years, and a maximum of NIS 43,630 for 8-15 years; so the longer it has been after one made aliyah the more one qualifies for.

 Zakaut Mortgage Loan Advantages: 

  • Interest rates are lower than average market rates.
  • No penalties when refinancing or when the partial or entire loan is repaid.
  • Discounted penalty penalty fees when repaying (partially or in full) the non-zakaut portion of the mortgage from the bank.
  • Discount on appraiser fees.
  • It’s more difficult to evict a person from his home for non-payment, since part of the mortgage is from the government, and not just the bank.

Grants for Purchasing a New Home in Israel’s Periphery:

In addition, once one has a teudat zakaut, they can further qualify for periphery grants.  The State encourages housing in the periphery towns or cities, namely those which are not located in the center of the country. In addition to the discount on the price of the apartment, non-homeowner beneficiaries who purchase an apartment in these areas will also receive a grant of between 40,00 – 60,000 NIS. This is not a loan, but free money, and the only requirement is not to sell the property within 5 years of purchase.

The following cities receive a grant of 60,000 NIS: 

Ofakim, Beit She’an, Dimona, Hatzor HaGlilit, Tiberias,Yeruham, Migdal Haemek, Ma’alot-Tarshiha, Mitzpe Ramon, Nazareth, Galilee View (Upper Nazareth), Netivot, Arad, Zefat, Kiryat Arba, Kiryat Shmona, and Sderot.

The following cities receive a grant of 40,000 NIS: 

Eilat, Ashkelon, Harish,  Nahariya, Acre, Afula, Rekhasim, Shlomi, and Kiryat Malachi.

Conclusion:Purchasing a home in Israel as an oleh involves many factors and governmental benefits one needs to be aware of in order to make the best decision. Not all benefits are great for everyone, and so it is highly recommended to work with a mortgage consultant when buying property in Israel. Check out my zakkaut calculator to see how much you qualify for.