Escrow Analysis Calculator

You can use this escrow calculator to determine the escrow deposits you will be required to make to ensure you have sufficient funds to meet insurance and tax obligations. You can also use this calculator to compute the value of escrow-held funds for insurance and tax premiums.

How to Use the Escrow Calculator

1. Input the month and year when the first loan payment will be made.
2. Input the amount of the annual payments.
3. Choose the number of months of the cushions from the drop-down menu.
4. Input a month for each distribution using the corresponding drop-down menu.

What is an Escrow Account?

Financial institutions typically require homeowners to set up and use escrow accounts in which to hold the funds needed to meet monthly insurance and tax obligations. The items that homeowners will typically need to cover within an escrow account include hazard insurance, flood insurance, private mortgage insurance, and real estate taxes.

When a loan has been secured, the borrower will be provided with an Initial Escrow Disclosure Statement that outlines the insurance premiums, estimated taxes, and any other charges that he or she may be expected to pay within the first 12 months following the creation of the escrow account.

When a borrower makes a monthly payment into an escrow account, a percentage of the funds is allocated to the loan principal and interest, while the remainder is posted to the escrow account.

The funds in the escrow account will grow over the course of the year and be used to pay any insurance and tax costs when they become due.

For example, if a home loan has an associated annual tax payment of $1,800, the monthly percentage that is allocated to the escrow account will be $150 ($1,800 divided by 12). If the annual insurance premium is $900, the monthly percentage going into the escrow for insurance will be $75 ($900 divided by 12).

The lender receives the insurance and tax invoices directly and subsequently deducts the payment from the borrower's escrow account.