When applying for a mortgage every Shekel of income count – both in order to insure that you’ll actually get an approval and and also to get better rates and terms.

The case when you already own an apartment

If you already own an apartment and you’re buying another property the bank does include your rental income:

• If your rental income is from a property tthat you already own – the bank will consider it at full (100% of the income)
• If it’s for a property that you buy, and is already rented –  the bank will consider it at full (100% of the income)
• If it’s for a property that you buy, and is not already rented – the bank will consider it only on a partial basis (usually about 80%, but this changes between banks). In this case you have to ask the Shamai (assessor) to include the expected rental income in his report. 

The case when you don’t already own an apartment – you’re buying your first property as an investment

In this case, mortgage banks are required to subtract your own rent payment form the future income

Q: What if I pay rent higher than the expected income?
A: Then no income will be considered

Q: What if I don’t pay any rent?  (i.e. I live at my parents’ home)
A: Then no income will be considered.

Q:  But why?
A: The assumption is that wither you’ll move into an apartment later and pay rent (thus reducing your income) or move into this apartment (thus reducing your income)

Q: Is this negotiable?
A: No.