“For the last two centuries it has been common teaching in Sunday School that there is a gate in Jerusalem called the eye of the needle through which a camel could not pass unless it stooped and first had all its baggage first removed. After dark, when the main gates were shut, travellers or merchants would have to use this smaller gate, through which the camel could only enter unencumbered and crawling on its knees! Great sermon material, with the parallels of coming to God on our knees without all our baggage. A lovely story and an excellent parable for preaching but unfortunately unfounded! From at least the 15th century, and possibly as early as the 9th but not earlier, this story has been put forth, however, there is no evidence for such a gate, nor record of reprimand of the architect who may have forgotten to make a gate big enough for the camel and rider to pass through unhindered.

Variations on this theme include that of ancient inns having small entrances to thwart thieves, or the story of an old mountain pass known as the “eye of the needle”, so narrow that merchants would have to dismount from their camels and were thus easier prey for brigands lying in wait.
Mangled Greek maybe?
There are some differences in the transmitted Greek. The needle in Matthew and Mark is a rafic. In Luke it is a belone. But both are synonyms for needles used in sewing, but Luke’s is more likely to be used by a surgeon than a seamstress.

Another possible solution comes from the possibility of a Greek misprint. The suggestion is that the Greek word kamilos (‘camel’) should really be kamêlos, meaning ‘cable, rope’, as some late New Testament manuscripts1 actually have here. Hence it is easier to thread a needle with a rope rather than a strand of cotton than for a rich man to enter the kingdom. A neat but unnecessary solution!

A variation on all of the above is that the needle was a 6 inch carpet needle and the rope was made of camel hair- but this is again clutching at straws or camel hair, and is an unnecessary emendation.
Makes sense in Aramaic
An alternative linguistic explanation is taken from George M Lamsa’s Syriac-Aramaic Peshitta translation2 which has the word ‘rope’ in the main text but a footnote on Matthew 19:24 which states that the Aramaic word gamla means rope and camel, possibly because the ropes were made from camel hair. Evidence for this also comes from the 10th century Aramaic lexicographer Mar Bahlul who gives the meaning as a “a large rope used to bind ships”. (cf. http://www.aramaicnt.org/HTML/LUKE/evidences/Camel.html)

Some have even suggested a pun in Aramaic between camel and gnat or louse from the Aramaic kalma ‘vermin, louse’.

Just as the apocryphal Acts of Peter and Andrew3 refers the saying to a literal camel and needle, so we are not meant to reason away the apparent difficulty of getting a camel through a needle’s eye. For the difficulty is not apparent it is real, and not be solved by textual trickery but by taking the ludicrous language at face value.

What we have instead then, I believe, is a beautiful Hebrew hyperbole, as in the tree sticking out of one’s eye whilst one is removing a speck in another’s eye! Indeed, Jewish Talmudic literature uses a similar aphorism about an elephant passing through the eye of a needle as a figure of speech implying the unlikely or impossible:
“They do not show a man a palm tree of gold, nor an elephant going through the eye of a needle.”4
This first instance concerned dreams and their interpretation and suggested that men only dream that which is natural or possible, not that which is unlikely ever to have occurred to them.
“… who can make an elephant pass through the eye of a needle.”5
In this case, the illustration concerns a dispute between two rabbis, one of whom suggests that the other is speaking “things which are impossible”.

The camel was the largest animal seen regularly in Israel, whereas in regions where the Babylonian Talmud was written, the elephant was the biggest animal. Thus the aphorism is culturally translated from a camel to an elephant in regions outside of Israel.

The aim is not, then, to explain away the paradox and make the needle a huge carpet needle for, elsewhere, the Jewish writings use the “eye of the needle” as a picture of a very small place, “A needle’s eye is not too narrow for two friends, but the world is not wide enough for two enemies.”6 . The ludicrous contrast between the small size of the needle’s eye and the largest indigenous animal is to be preserved for its very improbability.

Jesus’ hearers believed that wealth and prosperity were a sign of God’s blessing (cf. Leviticus and Deuteronomy). So their incredulity is more along the lines that, “if the rich, who must be seen as righteous by God by dint of their evident blessing, can’t be saved, who can be?”. Later Christians have turned this around to portray wealth as a hindrance to salvation, which it can be – but no more so than many other things, when the message is that salvation is impossible for all men for it comes from God alone.

But beyond impossibility is possibility with God for, elsewhere, a Jewish midrash records:
“The Holy One said, open for me a door as big as a needle’s eye and I will open for you a door through which may enter tents and [camels?]”7
In other words God only needs the sinner to open up just a crack for him and God will come pouring in and set up room for an oasis. God only needs a ‘foot in the door’, so to speak.

This is similar to the Talmudic use of two Hebrew letters, one which represents God holiness (‘Q’ Qoph, as in qadôsh ‘holy’) and another representing evil (‘R’ Resh, as in ra’ ‘evil’), in a story told for the purpose of teaching the Hebrew alphabet and Jewish morals. It is said that ‘q’ has a separated opening in order that should ‘r’ repent he may enter into God’s holiness through the small opening.

A brief survey of sermons or search on the Internet reveals how many perpetuate the myth of the small gate in Jerusalem. Victorian travellers to the Holy Land even claim to have been shown it. The inaccuracy may appear harmless but it is neither good scholarship nor good exposition. The exaggerated and contrasted size is deliberate and is not an overt judgement on riches or poverty. Jesus reflects on how hard it often is for the rich to enter the kingdom of God. The riches are a distraction and hard to share if one is too attached to them. The disciples’ incredulity is that if even the rich cannot be saved, who can? But the verdict is that even the rich, not only the rich, will find it impossible to save themselves – but with God all things are possible.”

Link:
http://www.biblicalhebrew.com/nt/camelneedle.htm