In March 2025 , The Bank of Israel implemented new restrictions on the “20/80” payment model for off-plan apartment purchases. For context, this model enabled buyers to pay a developer (only)  20% of the total cost upfront and defer the remaining 80% until the property’s completion. Clearly, this served as a powerful incentive to buyers who wanted to minimize risk, and proceed on a property at a pace suitable to their personal needs.  For multiple reasons (the economic repercussions of the war being one of them)  the new restrictions were designed to mitigate financial risks associated with deferred payment schemes, and supposedly prevent the formation of a housing bubble by ensuring that both buyers and lenders engage in more prudent financial practices.

This article will lay out what exactly has changed, how this affects developers and what opportunities are still open to buyers in spite of the changes.  

Key Changes Introduced:

1. Stricter Capital Requirements for Banks: Banks are now required to allocate more capital when financing projects where a significant portion of sales (over 25%) utilize the 20/80 payment plan. This measure increases the cost for banks to support such projects, thereby discouraging the widespread use of this payment model.
2. Limitation on Balloon Loans: The Bank of Israel has capped the issuance of balloon loans—where buyers pay only interest initially and the principal at the end—to no more than 10% of a bank’s total housing loans. This restriction aims to reduce the prevalence of high-risk lending practices.
3. Enhanced Risk Assessment: Previously, buyers could commit to a property with minimal upfront payment and secure financing later. The new guidelines emphasize even more thorough credit evaluations at the initial stages to ensure buyers can fulfill their financial obligations upon project completion.

How this has affected developers:

Developers: The restrictions might lead to reduced sales velocity for projects relying heavily on the 20/80 model, potentially impacting project financing and timelines. Although this is a concern more than an actuality, it’s worth bearing in mind.

How this has affected Buyers: Individuals interested in off-plan properties now need to provide a higher initial payment and undergo more rigorous financial scrutiny earlier in the purchasing process. This isnt set in stone, and from our experience negotiation of the purchase price is still the deciding factor in striking a good deal despite the tightened scrutiny.

The window of opportunity for buyers:

1. Early Access to 20/80 Deals: Some developers do still offer 20/80 payment plans for projects that were approved before the new regulations took effect. Acting swiftly could allow you to secure such deals before they become scarce.
2. Alternative Payment Structures: Developers are adapting by offering modified payment plans, such as 40/60 or 30/70 models. These alternatives also provide some financial flexibility, allowing buyers to defer a portion of the payment until the project’s completion.
3. Price Negotiations: With the new restrictions potentially slowing down sales, developers are actually negotiating prices or offering incentives to attract buyers. This could be an opportune time to negotiate favorable terms.
   
   In summary, while the traditional 20/80 payment model is becoming less prevalent due to regulatory changes, buyers who act promptly and explore alternative financing options will still find advantageous opportunities in the market.