In brief
An Israeli can obtain a mortgage from a Bulgarian bank, but this is each bank's decision under its own policy, and usually on stricter terms than for a local resident. The regulatory ceiling is fixed in any case: up to 85% financing, a repayment of up to 50% of disposable income and a term of up to 30 years. The main alternatives are an any-purpose loan in Israel, limited to 50% of the value of the encumbered property, payment instalments to the developer, and financing at the level of a Bulgarian company.
Key takeaways
- 1Bulgarian National Bank limits on housing loans: LTV of up to 85%, DSTI of up to 50% and a term of up to 30 years (in force since October 2024).
- 2The average interest rate on new housing loans in Bulgaria stood in July 2026 at 2.43% (APRC of 2.77%); a non-resident will not necessarily receive these terms.
- 3An any-purpose loan secured by an apartment in Israel is limited, according to the Bank of Israel, to 50% of the value of the encumbered property, and leaves the investor exposed to the shekel-euro gap.
- 4Payment instalments to the developer in an off-plan project are in practice financing - and also exposure to developer risk, which must be neutralized in the contract.
- 5The choice of financing route also affects tax in Israel: under the 15% rental track there is no deduction of interest.
Can an Israeli obtain a mortgage from a bank in Bulgaria?
Yes, but there is no built-in entitlement to one. Bulgarian banks do provide financing to foreign buyers, and the decision rests with each bank under its credit policy. In practice, a non-resident whose income is generated in Israel is examined much more carefully than a local borrower: full income documentation is required, a higher equity contribution, and sometimes less favorable terms - the financing rate, the interest and the loan term.
It is important to distinguish between two layers. The first layer is regulation, which applies to every housing loan in Bulgaria, to every borrower. The second layer is the bank's policy, which can be stricter but not more lenient.
The average interest rate on new housing loans in Bulgaria stood in July 2026 at 2.43% (APRC of 2.77%); a non-resident will not necessarily receive these terms.
What are the Bulgarian National Bank's limits on mortgages?
Since 1 October 2024, three limits have applied in Bulgaria to loans to households secured by residential property in Bulgaria:
| Limit | Ceiling | Practical meaning |
|---|---|---|
| Loan-to-value ratio (LTV-O) | Up to 85% of the property's value at the time the loan is granted | Equity of at least 15%, before taxes and costs |
| Debt-service-to-income ratio (DSTI-O) | Up to 50% of monthly disposable income | All of the borrower's obligations are counted, not only the new mortgage |
| Loan term | Up to 30 years | In practice banks also limit by the borrower's age at the end of the term |
| Exceptions | Up to 5% of the volume of new loans in the previous quarter | A small quota, not usually intended for foreign borrowers |
These are ceilings, not a promise. In most cases a bank financing a non-resident will set a financing rate significantly below 85%, and will require that income be documented with papers it can examine and verify.
How much does a mortgage in Bulgaria cost in 2026?
According to Bulgarian National Bank data, the average interest rate on new loans for home purchase stood in July 2026 at 2.43%, and the annual percentage rate of charge (APRC) - which includes fees and ancillary costs - at 2.77% (as of July 2026 data). This is a low rate compared with Israel, but it is a market average that mainly reflects local borrowers.
Since joining the eurozone on 1 January 2026, loans are denominated in euros, and the interest rate is directly affected by the policy of the European Central Bank. Colliers expects the changeover to the euro to encourage gradual growth in fixed-rate loans. In the Sofia housing market, about 27% of apartment transactions in 2025 were financed with a mortgage.
What will a Bulgarian bank require of an Israeli buyer?
The list of documents varies from bank to bank, but these are the requirements worth preparing for in advance:
- Full income documentation: pay slips or financial statements and tax assessments, usually for a period of several months to at least a year.
- A picture of existing obligations, including a mortgage in Israel - they are included in the repayment-ratio calculation.
- Notarial translations and apostille certification for Israeli documents.
- A Bulgarian identification number for tax purposes and a bank account in Bulgaria.
- A valuation by a certified appraiser the bank recognizes, and a legal check of the property on behalf of the bank.
- A property free of prior encumbrances: the bank will not release the money before its mortgage has been registered in the property register.
The approval and registration process takes time. It is worth obtaining an in-principle approval from the bank before signing a preliminary agreement, and including in the agreement a condition that allows you to exit it if financing is not approved - otherwise the deposit is at risk.
How does the lien in favor of the bank work in Bulgaria?
A mortgage in Bulgaria is created by a notarial mortgage deed and registered in the property register. The registration is valid for ten years and can be renewed before the end of the period; a late renewal restores the mortgage's validity, but its priority ranking is determined from the date of renewal. Therefore, in a long loan the bank will insist on renewal on time, and the borrower should know that the costs of renewal may fall on him.
What are the alternatives to a Bulgarian mortgage?
Most of the Israeli investors we meet do not finance with a Bulgarian bank, but with one of the following alternatives or a combination of them:
| Route | Advantages | Disadvantages and risks |
|---|---|---|
| Any-purpose loan secured by an apartment in Israel | A familiar process, in Hebrew, with no examination by a foreign bank | Up to 50% of the value of the encumbered property; interest usually higher; shekel debt against a euro property |
| Mortgage from a Bulgarian bank | Relatively low interest; euro debt against a euro property | Approval not guaranteed; document requirements; long process |
| Payment instalments to the developer (off-plan) | No bank approval needed; payment according to construction progress | Exposure to the developer; do not expect statutory protection similar to the Israeli Sale Law |
| Financing at the level of a Bulgarian company | Suitable for projects and commercial properties | Banks require equity and personal guarantees; company management costs |
| Partner equity | No bank debt | Requires a detailed partnership agreement, including exit and disputes |
An any-purpose loan in Israel: what are the limits?
According to the clarifications of the Supervisor of Banks to Directive 329 (as worded in February 2026), a loan secured by a residential apartment that is not intended for the purchase of an apartment in Israel - an "any-purpose loan" - cannot be considered financing of a sole or replacement apartment, and therefore the maximum financing rate in it is 50% of the value of the encumbered property.
The advantage is simplicity: the bank in Israel does not examine the property in Bulgaria. The disadvantage is a currency mismatch - the loan is in shekels, while the property and the income from it are in euros. When the shekel weakens, the repayment in shekels does not change but the property's value in shekels rises, and when the shekel strengthens the opposite happens. Someone who relies on the rent to pay the repayment needs to take this into account in the calculation.
Payment instalments to the developer: financing or risk?
In new projects in Bulgaria it is customary to pay the developer in stages, according to construction progress and the documents of each stage (frame, completion and use permit). This is practical financing, but the money passes to the developer before the apartment exists and is registered in your name. Therefore the contract must tie each payment to an event that can be verified in an official document, and include a protection mechanism in case of delay or suspension of construction.
- Check that there is a valid building permit and that the developer is the owner of the land or holder of a registered building right.
- Check whether the land or the project is encumbered in favor of a financing bank, and what your position is against it.
- Tie each payment to an official document, and not to the developer's declaration.
- Consider security for the payments - a bank guarantee or registration of a right - instead of relying on a contract alone.
How do you choose between the routes?
There is no single route that suits everyone. Someone who owns an apartment in Israel with significant available equity and wants to close a deal quickly will usually prefer a loan in Israel and take on the currency gap. Someone buying a relatively expensive income-producing property, with documented income and the ability to wait for approval, will consider a mortgage in Bulgaria, where the debt and the property are in the same currency. In an off-plan project, payment instalments to the developer are often the basis, with complementary financing toward handover joining it. In each case, it is worth building a calculation that combines the cost of financing, the tax in both countries and the exit scenario, and not comparing interest rates alone.
How does financing affect tax in Israel?
The financing decision is connected to the decision on the tax track. Someone who rents out the property and chooses in Israel the 15% track on rental income from abroad may deduct depreciation only - interest is not deductible. Under the regular track, at the tax brackets, expenses incurred in producing the income may be deducted, including interest. Therefore, in a significantly leveraged transaction it is worth examining both tracks before choosing the loan structure.
Before signing: how we accompany the financing
We build the financing structure with the client before the preliminary agreement: we check whether a Bulgarian mortgage is realistic in his case, coordinate the agreement's terms with the bank's timetable, and in an off-plan transaction we draft the payment mechanism so that every payment is backed by a document or security. Toward the Bulgarian bank we accompany the legal check and the registration of the mortgage, so that the money is released on time.
The contents of this article are general information only, as of October 2026, and do not constitute legal advice, tax advice, financial advice or an investment recommendation. Before any decision, obtain advice tailored to the circumstances of the transaction.
Frequently asked questions
How much equity is needed to buy an apartment in Bulgaria with a mortgage?
According to the central bank's limits, at least 15% of the property's value, since the loan is limited to 85%. In practice, a non-resident is usually required to contribute higher equity, and taxes, fees and professional fees must also be financed from equity.
What is the interest rate on a mortgage in Bulgaria?
According to central bank data, the average interest rate on new housing loans in July 2026 was 2.43%, and the APRC was 2.77%. This is a market average; the terms offered to a non-resident are determined by the bank's policy.
Can an apartment in Bulgaria be financed with a mortgage from an Israeli bank?
An Israeli bank will not take a lien on property in Bulgaria, but you can take an any-purpose loan secured by an apartment in Israel. According to the Bank of Israel the financing rate in it is limited to 50% of the value of the encumbered apartment, and the loan is in shekels - creating exposure to the euro rate.
Can loan interest be deducted for tax in Israel?
Only under the regular tax track on rental income. Under the 15% track only depreciation may be deducted, so in a leveraged transaction it is worth comparing both tracks with an accountant.
Read next · 10 min readReal Estate Development in Sofia: Planning and Construction, Permits and Legal Considerations for a ProjectAn Israeli developer in Sofia: holding land when a non-EU foreigner cannot buy it, the permit route to a use permit, contracts, off-plan sales and exit tax.Read the guideSources
- Bulgarian National Bank - Borrower-based measures for residential real estate loans (11 September 2024)
- BTA - BNB interest rate statistics for July 2026
- BTA / Colliers - Sofia residential market report (July 2026)
- Bank of Israel, Banking Supervision Department - Questions and answers on Directive 329, limits on housing loans (8 February 2026)
- Fibank - Conversion of loans from BGN to EUR
- Ben Shoshan & Co. - Taxation of rental income (the 15% track and the regular track)
The information in this guide is general in nature and does not constitute legal or tax advice on any specific transaction. Every transaction is assessed on its own facts.