Quick answer (October 2026): Escrow on a mortgage is an account your lender uses to collect and pay your property taxes and homeowners insurance for you. Each month, part of your mortgage payment goes into that account. Your servicer pays the tax and insurance bills from it when they come due. You may also hear it called an impound account. Federal rules let the servicer collect 1/12 of the yearly bills each month, plus a cushion of no more than 1/6 of the yearly total, which is about two months. Once a year the servicer reviews the account. A surplus of $50 or more is refunded to you within 30 days of that review if your payments are current.
Key takeaways
- Escrow turns two big yearly bills, property tax and homeowners insurance, into a smaller monthly deposit.
- Your servicer runs the account. That is the company you send your monthly payment to.
- The deposit changes when your tax bill or insurance premium changes. A yearly review resets it.
- The word escrow also means something else: the neutral account that holds money while a home sale closes.
Buying or refinancing in Las Vegas?
Ask a Valley West loan officer how taxes, insurance and escrow would fit into the budget for the home you have in mind. It is a conversation, not a loan decision or a commitment to lend. No obligation to apply.
Ask about escrow on a new loanWhat is an escrow account?
An escrow account is a separate account held on your behalf to pay two recurring bills on your home: your property taxes and your homeowners insurance. You do not pay those bills directly. Instead, part of every monthly mortgage payment is set aside in the account.
When a bill comes due, it is paid for you from that money. Lenders sometimes call the same thing an impound account. The two terms mean the same account.
The amount set aside is based on your yearly property tax bill and your yearly homeowners insurance premium. It is first worked out when your loan closes. Taxes and insurance change over time, so the account is reviewed each year and your deposit is adjusted to keep enough money in it.
On some loans the account pays other bills too, such as flood insurance or mortgage insurance. Mortgage insurance protects the lender if a loan is not repaid. Our guides to private mortgage insurance (PMI) and FHA mortgage insurance explain those costs. HOA dues and utilities are usually paid by you, not from escrow.
"An escrow account helps you pay these expenses because you send money through your lender or servicer, every month, instead of having to pay a big bill once or twice a year."
Escrow Accounts Details
Your taxes need to be paid on time to avoid penalties from the county.
A home with unpaid property taxes can get a tax lien, which is a legal claim against the home. Your insurance needs to stay paid so that a fire or other covered loss is covered. Escrow keeps money building up for both bills, so it is there when the bills arrive.
Some mortgage lenders require an escrow account when you borrow more than 80% of the home's value. That figure is called a loan-to-value ratio, or LTV. Your ongoing escrow account is held and run by your mortgage servicer. This is different from the escrow used to close your home purchase, which is handled by an escrow officer or title agent.
| Closing escrow | Mortgage escrow account | |
|---|---|---|
| What it is for | Holding money and papers while a home sale closes | Paying property taxes and homeowners insurance after you own the home |
| Who holds it | An escrow officer or title agent | Your mortgage servicer |
| Money in it | Earnest money, down payment and closing funds | Part of each monthly mortgage payment |
| When it ends | When the sale closes | When the loan is paid off, refinanced or sold, or when an escrow waiver is allowed |
How is my monthly escrow deposit figured?
Start with the yearly bills the account pays. Add them up. Divide by 12. That is the base monthly deposit. Federal rules (Regulation X, 12 CFR 1024.17) let the servicer collect 1/12 of the bills it reasonably expects to pay over the year.
The servicer may also keep a cushion. A cushion is extra money held in case a bill comes in higher than expected. The rule caps it at 1/6 of the yearly total, which works out to about two months of deposits.
Example with made-up numbers
Say your yearly property tax is $2,400 and your yearly homeowners insurance premium is $1,500. The yearly total is $3,900. Divided by 12, the escrow deposit is $325 a month. The largest cushion the servicer could hold is 1/6 of $3,900, or $650. These are escrow deposits only. They are illustrative figures, not a loan payment, a rate or an offer.
What would my escrow deposit be?
Type in your own yearly bills below. The estimator adds them up and shows the monthly deposit and the largest cushion the federal rule allows. If you also type your current deposit, it shows how much the deposit would change. If you already have a loan, your servicer sets your actual deposit.
Escrow deposit estimator
Type the yearly bills your escrow account pays. Use the amounts from your tax bill and your insurance policy.
This is Valley West Mortgage's own tool. It does the math in your browser and does not send your figures to us unless you submit the form further down. It uses only the numbers you type and shows escrow deposits only, not principal, interest or a loan payment. Your servicer's yearly escrow statement sets your real deposit, including any shortage repayment and its own cushion. This is not a quote, an offer of credit, a loan decision or a commitment to lend.
Escrow is one part of what you pay each month. Our home affordability guide shows how taxes and insurance fit into a full budget. Our guide to debt-to-income ratio shows how lenders compare that monthly cost with your income.
What do the federal escrow rules say?
The Real Estate Settlement Procedures Act (RESPA) and its rule, Regulation X, set the numbers below. They apply to most home loans. Your servicer's yearly escrow statement shows how your own account follows them.
| Rule | What it says |
|---|---|
| Monthly deposit | Up to 1/12 of the yearly bills the servicer expects to pay |
| Cushion | No more than 1/6 of the yearly total, about two months |
| Yearly review | A yearly escrow statement within 30 days after the end of the escrow year, with an account review done first |
| Surplus of $50 or more | Refunded within 30 days of the review, if your payments are current |
| Surplus under $50 | Refunded, or credited to next year's deposits |
| Shortage under one month's deposit | The servicer may leave it, ask for it within 30 days, or spread it over at least 12 months |
| Shortage of one month's deposit or more | The servicer may leave it, or spread it in equal monthly amounts over at least 12 months |
| Loan paid in full | Leftover escrow returned within 20 days, not counting weekends and legal public holidays |
| Higher-priced mortgage loan | On a first mortgage on your main home, an escrow account is generally required. You generally cannot cancel it for at least 5 years, unless the loan is paid off or refinanced |
A "current" borrower, under the surplus rule, is one whose payments arrive within 30 days of the due date.
A higher-priced mortgage loan is a loan on your main home whose APR is a set amount above a benchmark rate. The escrow rule applies when that loan is a first mortgage. The APR (annual percentage rate) is the yearly cost of the loan including some fees.
Why did my escrow payment go up?
Almost always, one of the bills went up. Your property tax bill rose, your insurance premium rose, or both. The yearly review then does two things. It raises the deposit to match the new bills. If the account came up short this year, the review may also add a repayment of that shortage.
Using the example above, say the insurance premium rises from $1,500 to $1,800. The yearly total goes from $3,900 to $4,200, so the deposit goes from $325 to $350 a month. That is $25 more, before any shortage repayment. Illustrative figures only.
If your premium jumped, it can be worth shopping your homeowners insurance. You choose your own insurer. Send your servicer the new policy details so the account pays the right company.
Want taxes and insurance in your numbers before you buy?
A Las Vegas loan officer can walk through how property tax, insurance and escrow would affect the monthly cost of the home you are looking at. It is not a loan decision or a commitment to lend. No obligation.
Talk with a loan officerWhen are Las Vegas property taxes paid from escrow?
Clark County's tax year runs from July 1 to June 30. The county mails real property tax bills once a year. Taxes can be paid in four installments.
Your servicer pays the bill from your escrow account. Some servicers pay the whole year at once and some pay each installment, so check your yearly escrow statement to see which.
| Installment | Due |
|---|---|
| 1st | 3rd Monday in August |
| 2nd | 1st Monday in October |
| 3rd | 1st Monday in January |
| 4th | 1st Monday in March |
The Treasurer allows a 10-day grace period: payment must be received or postmarked within 10 calendar days of the due date. A yearly bill of $100 or less must be paid with the first installment. If you buy a home partway through the tax year, the closing papers show how that year's taxes are split with the seller.
Do I have to have an escrow account?
It depends on the loan. FHA loans require monthly payments into escrow for taxes and hazard insurance under HUD's rule (24 CFR 203.23). Read about FHA loans in Las Vegas. A higher-priced first mortgage on your main home generally must have escrow too.
On a conventional loan, the lender may let you waive escrow in some cases, often only with enough equity. If you are offered a waiver, ask what it would change on your Loan Estimate. Without escrow you must budget for the full tax and insurance bills yourself and pay them on time.
Ask about escrow early. Once you apply for a specific loan, you receive a Loan Estimate. That is the standard three-page form that sums up the loan's costs. It shows the estimated escrow amount, so you are not guessing. Our preapproval guide explains the first step.
What happens to escrow when I sell or refinance?
When a loan is paid in full, the servicer must return any money left in escrow within 20 days, not counting weekends and legal public holidays. When you refinance, a new escrow account usually starts with the new loan. In some cases, if you agree, the old balance can be moved straight into the new loan's escrow account instead of being refunded.
A new escrow account often needs an opening deposit at closing. That is part of your cash to close. Our guide to seller-paid closing costs explains when a seller can help with those costs.
Escrow account FAQ
What is escrow on a mortgage?
Escrow on a mortgage is an account your lender uses to collect and pay your property taxes and homeowners insurance. A portion of your monthly mortgage payment goes into the account, and your servicer pays those bills from it when they are due.
What does an escrow account pay for?
It pays the two recurring costs of owning your home that are billed separately from your loan: property taxes owed to the county, and your homeowners insurance premium. On some loans it also pays flood insurance or mortgage insurance. Keeping these bills current protects you from late penalties and tax liens.
Is an escrow account required on a mortgage?
It depends on the loan. FHA loans and most higher-priced first mortgages require one. On a conventional loan the lender may allow a waiver in some cases. Your loan documents state whether an escrow account is required on your loan.
Is escrow the same as an impound account?
Yes. Impound account is another name for the same account. Which term you hear usually depends on the lender and the part of the country you are in.
What happens to my escrow account when I refinance?
Refinancing replaces your existing loan with a new one, so the escrow account tied to the old loan is closed and a new escrow account is set up with the new loan. The old servicer must refund any money left within 20 days after the old loan is paid off, not counting weekends and legal public holidays. In some cases, if you agree, the balance can be moved into the new loan's escrow account instead.
Who holds my escrow account?
Two different things are called escrow, and they are held by different parties. The ongoing account that pays your property taxes and homeowners insurance is held and run by your mortgage servicer, the company you send your monthly payment to. That is separate from closing escrow, where an escrow officer or title agent holds funds and documents for the purchase itself and then closes that file once the sale is complete.
How much extra can my servicer keep in escrow?
The cushion can be no more than 1/6 of the yearly bills paid from the account, which is about two months of deposits. For example, on $3,900 of yearly bills the most the cushion can be is $650.
Why did my escrow payment go up?
Usually because your property tax bill or homeowners insurance premium went up. The yearly review raises the deposit to match. If the account also came up short, the servicer may add a repayment, and for a shortage of one month's deposit or more it can be spread over at least 12 months.
When do I get an escrow refund?
If the yearly review finds a surplus of $50 or more and your payments are current, the servicer must refund it within 30 days of the review. A surplus under $50 may be refunded or credited to next year. When the loan is paid in full, leftover escrow is returned within 20 days, not counting weekends and legal public holidays.
Have a question about escrow on a new loan?
Tell us what you are planning. A Valley West loan officer can explain how escrow would work on the loan you are considering and what to expect at closing. This is not a commitment to lend. No obligation to apply. If you already have a loan, your servicer is the place to ask about your current escrow account.
Start my escrow questionTalk to a Valley West specialist
Sources
- CFPB, What is an escrow or impound account?
- CFPB, Regulation X, 12 CFR 1024.17: Escrow accounts
- CFPB, Regulation X, 12 CFR 1024.34: Timely escrow payments and treatment of escrow account balances
- CFPB, Regulation Z, 12 CFR 1026.35: Requirements for higher-priced mortgage loans
- 24 CFR 203.23: Mortgagor's payments to include other charges (FHA)
- Clark County Treasurer, Frequently asked questions: real property tax
Updated October 23, 2026: added an escrow deposit estimator, a table of the federal escrow rules, the Clark County tax installment calendar, a comparison of closing escrow and an escrow account, three new FAQs, a contact form and call links, and replaced two outside links that no longer work. Facts last verified October 23, 2026 against CFPB publications, Regulation X, Regulation Z, HUD's FHA rule and the Clark County Treasurer.
