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Escrow Calculator
Use this free escrow calculator to work out your monthly escrow payment and your total monthly mortgage payment. Enter the home price, down payment, property taxes, homeowners insurance, and PMI, and see the full breakdown — including the two-month RESPA cushion your lender may hold.
| Figure | Value |
|---|---|
| Loan amount | $320,000.00 |
| Principal & interest | $2,022.62 |
| Property taxes (monthly) | $400.00 |
| Homeowners insurance (monthly) | $150.00 |
| Monthly escrow (taxes + insurance) | $550.00 |
| PMI (monthly) | $0.00 |
| HOA dues (monthly) | $0.00 |
| Total monthly payment | $2,572.62 |
| Annual escrow collected | $6,600.00 |
| 2-month cushion (RESPA max) | $1,100.00 |
| Escrow + cushion to fund at closing | $7,700.00 |
How it works
When you have a mortgage, your monthly payment is usually more than just principal and interest. Most lenders collect an extra amount each month into an escrow account, then use that money to pay your property taxes and homeowners insurance when those bills come due. That extra amount is the escrow payment. It is your money, held by the lender for a specific purpose — it is not a fee, and it does not go to the lender's profit.
The escrow payment is simple to figure out: add up one year of property taxes and one year of homeowners insurance, then divide by twelve. With $4,800 of annual taxes and $1,800 of annual insurance, the yearly total is $6,600, so the monthly escrow payment is $550.00 — $400.00 for taxes and $150.00 for insurance. You can enter taxes and insurance as annual amounts, which is how the bills usually arrive, or as monthly amounts if that is how your lender quotes them.
Your total monthly payment adds the loan itself. Principal and interest are figured from the loan amount — the home price minus your down payment — the interest rate, and the term, using the standard fixed-rate mortgage formula. A $320,000 loan at 6.5% over 30 years costs $2,022.62 a month in principal and interest. Add the $550.00 escrow payment and the total is $2,572.62 a month. Shorter terms raise the monthly principal and interest but pay the loan off faster and cost far less interest overall.
Two optional items can join the monthly payment. Private mortgage insurance, or PMI, is usually required when the down payment is under 20%, and it is collected with the monthly payment even though it is not technically part of the escrow account. HOA dues are normally paid separately to the homeowners association, not through escrow, but the calculator can include them in the total so you see the full monthly cost of the home in one number.
Finally, there is the cushion. Under the Real Estate Settlement Procedures Act (RESPA), a lender may keep an extra reserve in the escrow account of up to two months of escrow payments. On a $550.00 monthly escrow payment, that is up to $1,100.00. The cushion protects against a tax or insurance increase landing before enough has been collected. At closing you typically fund the first months of escrow plus the cushion — $6,600.00 of annual escrow plus the $1,100.00 cushion is $7,700.00 in the worked example below, though the exact closing figure depends on the time of year and your lender's schedule.
Worked example
A buyer purchases a $400,000 home with 20% down, a 30-year loan at 6.5%, annual property taxes of $4,800, and annual homeowners insurance of $1,800. There is no PMI and no HOA.
Step 1: The down payment is $400,000 × 20% = $80,000, so the loan is $320,000.
Step 2: Principal and interest on a $320,000 loan at 6.5% over 30 years is $2,022.62 per month.
Step 3: Monthly taxes are $4,800 ÷ 12 = $400.00 and monthly insurance is $1,800 ÷ 12 = $150.00, so the monthly escrow payment is $550.00.
Step 4: The total monthly payment is $2,022.62 + $550.00 = $2,572.62.
Step 5: The two-month cushion is 2 × $550.00 = $1,100.00, so escrow plus cushion to fund is $6,600.00 + $1,100.00 = $7,700.00.
The result: a $550.00 monthly escrow payment and a $2,572.62 total monthly payment. With a 10% down payment on a $300,000 home at 7% instead, the same calculator gives a $1,796.32 principal and interest payment, $550.00 of escrow, and, with $135.00 of PMI and $50.00 of HOA, a $2,531.32 total — try it.
FAQ
What is an escrow payment?
An escrow payment is the part of your monthly mortgage payment that your lender holds to pay your property taxes and homeowners insurance for you. On a $400,000 home with $4,800 of annual taxes and $1,800 of annual insurance, the monthly escrow payment is $550.00.
What is included in a monthly escrow payment?
The monthly escrow payment covers one-twelfth of your annual property taxes plus one-twelfth of your annual homeowners insurance. If your loan requires private mortgage insurance, PMI is usually added to the monthly payment as well. HOA dues are normally paid separately, not through escrow.
What is the escrow cushion?
The cushion is an extra reserve your lender keeps in the escrow account, limited by the Real Estate Settlement Procedures Act (RESPA) to no more than two months of escrow payments. On a $550.00 monthly escrow payment, the cushion is up to $1,100.00, and it protects against a tax or insurance increase.
Why does my escrow payment change every year?
Your lender re-analyzes the escrow account once a year. If property taxes or insurance premiums rose, the monthly escrow payment goes up to cover the new amounts. If they fell, or the account has a surplus, the payment can go down or you may receive a refund.
Is PMI part of escrow?
PMI is usually collected with your monthly mortgage payment alongside the escrow amount, and it is shown in the total here. It is not technically part of the escrow account, but most borrowers see it on the same monthly statement. PMI is typically required when the down payment is under 20%.