Reverse Mortgage in Israel: How It Works (2026 Guide)
If you're an oleh in your 60s or 70s, there's a decent chance your biggest asset is the apartment you live in, and your pension is smaller than you planned. And if you're the adult child in New York, London or Johannesburg, there's a decent chance you just heard the words "reverse mortgage" on a Sunday call with your parents and felt your stomach drop. 😬
Both reactions make sense. Here's how the Israeli product actually works, and how it's different from what you may know from the US.
(If you read Hebrew, my full reverse mortgage guide goes deeper on every point. This is the English map.)
Information is accurate as of October 2026. Terms change, and the binding terms are always the ones in the offer and the contract.
🏠 What a reverse mortgage in Israel is
In Hebrew it's called mashkanta hafucha. The idea: homeowners aged 60 and up (some lenders start at 55) borrow against an apartment they own, keep living in it, and don't have to make monthly payments. Interest is added to the debt instead. The loan is repaid when one of three things happens:
- ✅ The home is sold
- ✅ The borrowers leave it permanently (for example, a move to assisted living or a nursing home)
- ✅ The last borrower passes away
If one spouse dies, the surviving spouse keeps living in the home. Nothing has to be repaid at that point.
You can usually take the money as a lump sum, in installments, or as a monthly top-up to your pension. Some lenders let you draw in tranches, so you only pay interest on what you actually took.
🇺🇸 How it differs from a US reverse mortgage (HECM)
If your reference point is the American HECM, a few things work very differently here:
No government insurance program. In the US, most reverse mortgages are insured through the FHA, and the non-recourse protection comes from that federal framework. Israel has nothing equivalent. Each lender sets its own terms. Some lenders state in their terms that repayment is limited to what the home sells for (Harel 60+ and Phoenix say this explicitly, and Clal's terms say the same), so heirs never owe more than the house. But it's a contract term, not a national guarantee. You find it in the contract, in writing.
Insurance companies are the main lenders. Most of the Israeli market sits with insurance companies: Clal, Harel 60+, Phoenix, Menora and Ayalon. Banks have their own versions too, which work differently (more on that below).
The amount depends heavily on age. Lenders finance a percentage of the appraised value, and that percentage rises with the age of the younger spouse. Around age 60 it's low, roughly 15% to 25% of the home's value. At advanced ages it can reach about 50% to 60%. Phoenix, for example, lends 15% to 60% depending on age; Clal goes from 20% at 55 to 60% at 90+. Most lenders also want a property worth at least around ₪1 million.
CPI linkage. Many Israeli loans are linked to the consumer price index (the madad). With a CPI-linked track, the debt grows with inflation on top of the interest. If you've only ever had a US fixed-rate loan, this is the part to understand slowly.
No HUD-style counseling session. Instead, the family is built into the process: lenders such as Clal, Harel and Phoenix ask adult children to sign a document confirming they know about the loan. They are not guarantors and don't take on the debt. They just can't say later they never knew.
Check if a reverse mortgage fits you →
📈 How the debt grows (the part nobody should skip)
No monthly payment doesn't mean no cost. It means the cost is deferred, and it compounds.
Here's an illustration, rounded and clearly hypothetical. A couple aged 72 and 69, apartment worth ₪2 million, borrowing ₪500,000. Assume the debt grows by 6% a year (interest plus CPI linkage):
| Years from now | Approx. debt |
|---|---|
| Today | ₪500,000 |
| 5 years | ₪670,000 |
| 10 years | ₪895,000 |
| 12 years | ₪1,000,000 |
| 15 years | ₪1,200,000 |
Roughly double in 10 to 15 years, depending on the rate and the index. Meanwhile the apartment's value may also rise (or not), and what's left for the family is the gap between the two.
Two things soften this. Many lenders let you pay part of the interest voluntarily, which slows the growth. And early repayment is generally allowed (Clal, for example, allows it at any time without a fee). Check the exact early-repayment terms in the contract either way.
Costs to budget for: a file-opening fee of a few thousand shekels, an appraisal, a lawyer, and building insurance. Some lenders also charge a monthly management fee. Ask whether each cost is paid out of pocket or added to the loan.
✅ Who qualifies
The usual checklist, which varies by lender:
- ✅ Age. Usually 60+, some lenders from 55 (Clal and Ayalon among the insurers). At Harel 60+, both spouses need to be 60 or older.
- ✅ A home you own in Israel, typically worth around ₪1 million or more, properly registered. Harel, for example, accepts Tabu, a housing company or Israel Land Authority (Rami) registration.
- ✅ Often no income test at insurers, since there's no required monthly payment. Phoenix states no income tests, no guarantors and no life insurance.
- ✅ Health documents at older ages at some lenders. Phoenix asks for medical approvals from age 80. Clal requires no health declaration.
- ✅ A rented-out home can be acceptable at some lenders (Clal; Harel with prior approval), which matters for olim who split time between countries.
For a fuller picture of the numbers by age, see how much you can get from a reverse mortgage (in Hebrew).
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👨👩👧 Heirs, estates, and children who live abroad
When the last borrower passes away, the heirs choose: repay the debt and keep the apartment, or sell it, repay the lender from the proceeds, and keep the rest. Clal, Harel and Phoenix give heirs a window of one year (12 months) to do that.
A year sounds like a lot. From abroad, it isn't always. Selling an apartment in Israel as a non-resident heir usually means getting an Israeli inheritance order or probate of the will, appointing a lawyer here, possibly giving power of attorney, and coordinating a sale across time zones. Tax questions can come up too. None of this is impossible, but all of it takes time, so it's worth speaking with an Israeli lawyer about the estate while your parents are planning, not after.
A few practical steps for families abroad:
- ✅ Make sure there's an up-to-date will that works in Israel
- ✅ Keep copies of the loan contract and the lender's contact details somewhere all siblings can reach
- ✅ Know whether the contract caps the debt at the home's value
- ❌ Don't assume the apartment is "the inheritance" without seeing the projected debt in 10 and 15 years
🌍 The family conversation across countries
This is the real work, and it's harder over WhatsApp video with a seven-hour time difference.
It's your parents' home and their money. They don't need your permission. But a decision that shapes what's left for everyone deserves a conversation where everyone sees the same numbers. What helps:
- ✅ Start with the need, not the product. Is it a monthly top-up? Paying for a caregiver? Helping a grandchild buy an apartment? Sometimes the need has a cheaper answer, and sometimes the family is the cheaper answer.
- ✅ Ask for a projection. How much is borrowed, at what terms, and what's the expected debt in 5, 10 and 15 years.
- ✅ Get one call with everyone on it. Parents in Israel, siblings in two other countries, same screen, same numbers.
- ❌ Don't open with "you're spending our inheritance." Even if that's what hurts. It ends the conversation.
If you want a sense of who this product genuinely suits and who it doesn't, I wrote who a reverse mortgage is right for, and who it isn't (in Hebrew).
🏦 Bank alternatives
Israeli banks offer softer variants. They usually have a defined term, and some require paying at least the interest every month:
- Mizrahi-Tefahot's "pension mortgage" (mashkanta pensionit): up to 30 years, with an initial period of up to 20 years where you pay interest only or defer payments, then repay the balance in one sum or installments.
- Leumi's "Gold Mortgage" (mashkanta zahav): for ages 60+, up to 50% of the home's value, with full balloon, interest-only or regular repayment tracks.
- Bank of Jerusalem's reverse mortgage: from age 55, interest-only payments, a term of up to 30 years, with the borrower no older than 85 at the end.
The trade-off in one line: with interest-only payments the debt stays flat and more of the home stays in the family, but you need a monthly income that covers the interest. With an insurer's full balloon there's nothing to pay monthly and no end date, but the debt grows. And if your parents still have an old mortgage on the apartment, any new loan will usually need to clear it first.
The right answer depends on income, ages, the property, and what the family wants to leave behind. That's a calculation, not a brochure. If you're also weighing a regular mortgage for a younger family member, my guide to mortgages in Israel covers the basics.
💬 Let's talk
If you're an oleh aged 60+ with an apartment in Israel, or the adult child abroad trying to make sense of what your parents were offered, let's look at it together. I sit with the whole family (in English, on one call across countries) and put the offers side by side, with what the debt looks like over the years. A free intro call, no commitment.
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