Escrow Payment Calculator
Calculate your monthly escrow payment for property taxes and homeowner insurance.
See the full breakdown of your total mortgage payment.
Escrow payments are the portion of your monthly mortgage payment that your lender holds in a dedicated account to pay property taxes and homeowner’s insurance on your behalf. Most conventional mortgages require an escrow account when the down payment is less than 20%.
The monthly escrow calculation:
Monthly Escrow = (Annual Property Tax + Annual Insurance) ÷ 12
Total Monthly Payment = Principal & Interest + Escrow + PMI (if applicable)
Escrow cushion (reserve): Lenders are permitted by federal law (RESPA) to hold up to 2 months’ worth of escrow payments as a cushion against shortfalls.
Minimum Starting Escrow Balance = (Annual Tax + Annual Insurance) ÷ 6
Worked example: A home with:
- Annual property tax: $4,800
- Annual homeowner’s insurance: $1,440
- Monthly P&I payment: $1,350
Monthly escrow: ($4,800 + $1,440) ÷ 12 = $520/month Total monthly payment: $1,350 + $520 = $1,870/month Initial escrow deposit at closing: $520 × 2 = $1,040 cushion (lender may require this upfront)
Annual escrow analysis: Every year, your lender performs an escrow analysis — comparing what was collected against what was actually paid out. If taxes or insurance increased, your monthly escrow payment will increase. If there was a surplus over $50, the lender must refund it.
Property tax rate reference:
| State | Average Effective Tax Rate |
|---|---|
| Hawaii | 0.28% |
| New Jersey | 2.23% |
| Illinois | 2.08% |
| Texas | 1.60% |
| California | 0.76% |
Understanding your escrow ensures no surprises at the annual review — and helps you budget for the true monthly cost of homeownership.