The change to the payment-to-income ratio calculation took effect on October 1, 2026. It was established in February, and a Bank of Israel circular in June postponed its introduction from July to October. In practice, when assessing a new loan against a property that is already mortgaged, the bank also takes existing repayments on that property into account, subject to the directive's conditions.
Which Loans Are Included in the Calculation
Under the amendment to Directive 329, monthly repayments include previous loans secured against the same property with a repayment period exceeding 18 months. The lender's identity does not exclude them from the calculation: they may be with the same bank, another bank or another institution.
This distinction matters to anyone who has a mortgage with one bank and is seeking additional credit elsewhere. Moving between institutions does not remove the existing repayment from the assessment. Anyone simply continuing to pay their mortgage is not required to take out a new loan because of the change.
Disposable Income Is Not Necessarily Your Salary
The payment-to-income ratio divides the monthly repayment by monthly disposable income. Under Appendix A to the directive, disposable income means net income minus fixed expenses as defined there. A repayment already counted on the repayment side is not deducted again as a fixed expense.
It is therefore worth asking the bank for both sides of the calculation: what is included in repayments and what has been deducted from income. A single figure without the breakdown behind it does not explain what is limiting the application.
What a Numerical Example Looks Like
Suppose, for illustration only, that the bank recognizes disposable income of NIS 18,000 after the relevant deductions. The existing repayment on the home is NIS 4,500, and the additional loan would add NIS 2,700. Assuming the existing loan is included under the directive's conditions, the combined repayment is NIS 7,200, or 40% of disposable income.
Assessing the new loan alone would show 15%, but that is not the combined ratio in this example. The calculation is intended only to illustrate the combination, not to reproduce the previous rules or guarantee approval.
The 50% Ceiling Is Not a Household Budget Target
The directive prohibits a bank from approving and issuing a housing loan with a payment-to-income ratio above 50%, subject to exceptions. The exceptions listed include bridging loans with an original term of up to three years and loans for any purpose of up to NIS 120,000. Whether an exception applies requires an assessment of the specific application.
Even a ratio below the ceiling does not guarantee credit. For the household, there must still be room for regular expenses, unexpected costs and a possible change in repayments. The fact that a particular debt is excluded from one regulatory component does not mean it disappears from the budget.
What to Prepare Before Requesting More Credit
Gather the balances, monthly repayments and end dates of the loans against the home, along with proof of income. When applying to consolidate debts, ask for a breakdown of which loans will be closed and what will remain payable afterward.
A useful comparison of offers should also include the repayment period and the total amount expected to be paid. A smaller monthly repayment may result from spreading the debt over a longer period. Before committing, understand what has changed in the debt itself and what has simply been spread over more months.
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