About the Mortgage Escrow Calculator
This mortgage escrow calculator runs a simplified version of the annual escrow analysis your loan servicer performs. Enter your yearly property tax, homeowners insurance and any other escrowed bills, the months they are due, and your current escrow balance. It projects the account month by month, finds the lowest point, and tells you the deposit needed to keep that low point at the allowed cushion.
Use it when your servicer sends an escrow statement with a payment increase, when your tax bill or insurance premium changes, or before closing to understand the escrow portion of your payment. It shows whether you face a shortage (usually spread over the next 12 months) or a surplus that may be refunded.
The model assumes one deposit of one-twelfth of the yearly bills each month, deposits credited before bills are paid in the same month, and a cushion of up to two months of escrow payments, the maximum a US servicer can hold under RESPA. Actual statements can differ slightly because of exact due dates and rounding.
With the default inputs, the new monthly escrow payment is $533.33. Change any value above to recalculate instantly.
How to use the mortgage escrow calculator
- 1Enter your yearly property tax and homeowners insurance from your latest bills.
- 2Choose whether tax is paid in one or two installments and the months bills are due.
- 3Set the cushion your servicer uses (usually 2 months).
- 4Enter your escrow balance at the start of the new escrow year and your current deposit.
- 5Read the new payment, then check the chart to see where the balance hits its low point.
Formula and method
The base deposit D is one-twelfth of all yearly escrowed bills. The calculator adds D to the account each month and subtracts each bill in the month it is due, tracking the cumulative change. The most negative point of that running total is the amount the starting balance must cover so the account never drops below the cushion C.
If your actual starting balance B is below the required start, the gap is a shortage, which servicers typically spread over 12 months, so the new payment is D + shortage ÷ 12. If B is above it, the excess is a surplus. The cushion is capped at two months of deposits (one-sixth of the yearly total), the RESPA limit.
- D
- Base monthly escrow deposit
- T, I, O
- Yearly property tax, insurance and other escrowed bills
- C
- Cushion = cushion months × D (max 2 months)
- B
- Escrow balance at the start of the escrow year
Worked examples
$4,200 tax in two installments, $1,800 insurance
Yearly bills total $6,000, so the base deposit is $500. The balance dips furthest in month 6, $900 below where it started, so with a $1,000 cushion the account must start at $1,900. Starting at $1,500 leaves a $400 shortage, or $33.33 extra per month, for a new payment of $533.33.
Surplus after a lower tax bill
Bills of $4,200 a year need $350 a month. Because the single tax bill arrives late in the year, the account only needs $1,050 at the start to stay above the $700 cushion. A $2,500 balance leaves a $1,450 surplus, which is large enough to be refunded.
Big shortage after an insurance jump
With $9,000 of yearly bills the base deposit is $750. The account needs $3,000 at the start to keep the $1,500 cushion, but only holds $500, a $2,500 shortage. Spread over a year, that pushes the payment to about $958, up $258 from today.
Frequently asked questions
What is an escrow shortage?+
A shortage means your escrow account will not have enough to pay upcoming tax and insurance bills while keeping the required cushion. It usually happens when property taxes or insurance premiums rise. Servicers normally let you repay it over 12 months or in one lump sum.
How much cushion can my lender keep in escrow?+
Under the Real Estate Settlement Procedures Act (RESPA), a servicer can require a cushion of no more than one-sixth of the total yearly escrow disbursements, which equals two months of escrow payments.
Will I get an escrow surplus refunded?+
If the annual escrow analysis finds a surplus of $50 or more and your loan is current, the servicer generally must refund it within 30 days. Smaller surpluses can be credited toward next year’s escrow payments.
Why did my mortgage payment go up if my rate is fixed?+
A fixed rate only locks principal and interest. The escrow part changes whenever property taxes or insurance premiums change, and a shortage repayment can add to it temporarily for 12 months.
Should I pay the escrow shortage in a lump sum?+
Paying the shortage at once keeps your new payment at the base deposit, which lowers monthly cash flow pressure. Spreading it costs no interest, so the choice mainly depends on whether you have spare cash.
Results are estimates for educational purposes and are not financial advice. Rates, fees and terms vary — confirm with your lender or a licensed advisor before making decisions.