Escrow Calculator: Deposit, Cushion and Shortage Check

An escrow account is set up by your mortgage lender to pay certain property-related expenses, usually property taxes and insurance, from a portion of your monthly payment (CFPB, read November 2026). Regulation X defines it more widely: 12 CFR 1024.17(b) covers taxes, insurance premiums including flood insurance, and other charges the borrower and servicer agree the servicer should pay. That is why the tool has an “other escrowed items” line.

Two limits in the same section set what can be collected:

• The monthly limit. Under (c)(1)(ii), the servicer may charge 1/12 of the total annual escrow payments it reasonably expects to make, plus an amount to maintain the cushion. If a shortage or deficiency exists, it may add further deposits under paragraph (f).
• The cushion limit. Under (c)(5), the cushion “must be no greater than one-sixth (1/6) of the estimated total annual disbursements.” On $8,400 of bills that ceiling is $1,400, the same as two $700 deposits.

The 1/6 figure is a ceiling, not a requirement. Paragraph (d)(2)(ii) says the lowest monthly target balance must be at or below 1/6 of annual disbursements “or a lesser amount specified by state law or the mortgage document,” and paragraph (c)(8) says lower cushion limits in the loan documents apply. Read your mortgage before assuming two months is what you owe, and set the cushion field to match. Paragraph (c)(6) also bars pre-accrual, which the rule describes as requiring funds in the account some period before the disbursement date.

Since all servicers must use aggregate accounting under (c)(4), an escrow calculator can be tested against a published answer. Appendix E to Regulation X works an account with $1,560 of bills: $500 in July, $360 in September and $700 in December, with payments of $130 starting in July. The method in (d)(2)(i) has three steps.

1. Trial balance. Start from zero. Each month add the deposit and subtract any bill. The balance reaches its lowest point in December, at −$780.
2. Adjusted balance. Raise the starting point “just” enough to bring the lowest month to zero. Here that means starting at $780.
3. Cushion. Add the cushion to every month. 1/6 of $1,560 is $260, so the account starts at $1,040 and bottoms out at $260.

Selected months. Inputs and result from Appendix E to 12 CFR Part 1024, CFPB, read November 2026; the calculator on this page returns the same $130 deposit, $1,040 start and $260 low.

Here is the method on the default inputs: an illustrative $6,000 property tax paid half in April and half in October, $2,400 homeowners insurance paid in August, an escrow year starting in January and the full two-month cushion. These bill amounts are placeholders, so use your own tax and insurance bills.

Inputs: $8,400 a year, bills as stated, two-month cushion. Computed by this page's calculator on 2026-11-04 using the aggregate method in 12 CFR 1024.17(d)(2).

Two things to check. The October low is exactly $1,400, the cushion, which is what the aggregate method is built to produce. And December ends where January began, because the deposits equal the bills over a full year. If your own statement shows a low point above 1/6 of annual bills, ask why.

Two homeowners with identical bills can owe very different amounts at closing. The monthly deposit depends only on the yearly total. The starting balance depends on how early in the escrow year the money goes out, because the account must already hold enough to clear the first bills.

Inputs: $6,000 tax plus $2,400 insurance, two-month cushion, escrow year starting in January. Computed by this page's calculator on 2026-11-04.

The spread runs from $1,400 to $9,100 with nothing changed but the calendar. That is why the tool asks for months, and why it offers “Not sure”: that setting places the bill in the first month, which gives the highest starting balance. The calculator treats the starting balance as the upfront deposit for a new loan: paragraph (c)(1)(i) lets a servicer charge, when it creates the account, enough to pay the charges plus a cushion of up to 1/6, and Step 3 of the method gives that first balance. Real accounts add one wrinkle: under paragraph (k) the servicer pays on or before the deadline to avoid a penalty, so a bill's deadline, not the month you think of it as due, decides where it sits in the projection.

On your paperwork, the Loan Estimate itemizes this money under “Initial Escrow Payment at Closing”, showing a monthly amount and a number of months for each item. The CFPB's commentary notes that the aggregate adjustment is not included on the Loan Estimate. It appears on the Closing Disclosure, so the two totals can differ. After that, paragraph (g) requires an initial escrow account statement at settlement or within 45 calendar days of it.

Each year the servicer re-runs this analysis and must send an annual statement within 30 days of the end of the escrow computation year, under paragraph (i). A rise in your bills is one reason the payment changes: the CFPB says that your payment will also go up or down if your taxes or premiums go up or down (read November 2026).

To check the projection, compare three lines against the calculator:

• Estimated disbursements. If the servicer knows next year's charge, it must use it. If not, paragraph (c)(7) lets it use last year's charge, or last year's charge raised by no more than the latest change in the national CPI for all urban consumers.
• Target balance at the low point. It should not exceed 1/6 of projected disbursements, or any lower figure your state or mortgage sets.
• Balance at the start of the new year. Enter it as “Escrow Balance Now” and the tool compares it with the target.

Small differences are normal because a servicer works from exact due dates while the tool works in whole months. A large difference is worth a call. The CFPB notes it is possible that your mortgage servicer simply made a mistake, and suggests calling first, asking for a corrected statement, and keeping a reference number.

Three words decide what happens after an analysis. A shortage is the amount by which the balance falls short of the target. A surplus is the amount by which it exceeds the target. A deficiency is a negative balance, which can happen when the servicer advances money to pay a bill. The rules in paragraph (f) differ for each one.

Summary of 12 CFR 1024.17(f), CFPB, read November 2026. You are current if the servicer receives your payments within 30 days of the due date. If you are not, a surplus may be retained and a deficiency recovered under the loan documents.

The line people miss is the fourth row. A shortage of a month or more cannot be required as a lump sum. The CFPB's mortgage servicing FAQs (updated 6/2/2021, read November 2026) add that a servicer may accept an unsolicited lump sum, but cannot require one or offer it as an option on the annual statement. So paying it off at once is your choice, not theirs.

Say the tax on the $8,400 account rises by $1,200, taking the yearly total to $9,600. The ordinary deposit moves from $700 to $800, the cushion ceiling from $1,400 to $1,600, and the starting target from $2,800 to $3,200. What happens next depends on what the account holds. The P&I here is $2,725.99, the payment on an illustrative $400,000 loan over 30 years at 7.24%, the Freddie Mac PMMS 30-year average for the week of October 29, 2026.

Inputs: $9,600 yearly bills with the tax paid in April and October, insurance in August, two-month cushion. Computed by this page's calculator on 2026-11-04.

On a negative balance the tool shows the deficiency and the climb from zero to the target as separate lines, so that no dollar is counted twice and each line can use its own repayment rule. Your servicer may set this out differently, so read its statement.

Notice that the bigger increase is rarely the repayment. In the $400 row, $100 of the $133.33 rise is the new deposit, which lasts as long as the bills stay high, and only $33.33 ends after 12 months. Paying a shortage off early removes the add-on, but the $800 stays. For how the same bills flow through a whole loan, see the amortization schedule with taxes and insurance.

To calculate a mortgage payment with escrow, add the monthly deposit to your principal and interest. Enter P&I in the optional field and the tool returns the full figure. Using the illustrative $400,000 loan and the same PMMS week:

• 30 years at 7.24%: $2,725.99 P&I plus $700 escrow is $3,425.99 a month.
• 15 years at 6.60%: $3,506.46 P&I plus $700 escrow is $4,206.46 a month.

If you only have the loan terms, the principal and interest calculator gives you the first number, and the calculator with PMI, taxes and insurance carries the whole payment across the life of the loan.

Searches for an “amortization calculator with escrow” often rest on a misunderstanding: escrow does not amortize. It carries no loan interest and pays down no principal. It passes through the account to the county and the insurer, so a schedule with escrow has the same balance in every row as one without. Only the total payment column changes. The guide to reading a mortgage amortization schedule shows those columns row by row. Extra money sent to escrow will not shorten your loan either; the escrow balance and the loan balance are separate accounts.

A mortgage payoff calculator including escrow should treat the account as money coming back to you. Under 12 CFR 1024.34(b)(1), within 20 days of payment in full (excluding legal public holidays, Saturdays and Sundays), the servicer must return any amounts remaining in an escrow account within its control. The official commentary adds that the servicer is not barred from netting those funds against the outstanding balance, so a payoff quote may already reflect them. Ask which way your servicer handles it, then use the early mortgage payoff calculator for the loan side.

Once the loan is gone, the bills are yours again. The escrow calculator's total divided by 12 is still a useful amount to set aside each month, since no servicer is now paying the tax bill or the premium for you.

A refinance works a little differently. Under 1024.34(b)(2), if you agree, the servicer may credit the remaining funds to the escrow account on a new loan, where the new loan comes from a lender that qualifies under that paragraph. Otherwise the refund rule applies and you fund the new account at closing. The refinance amortization calculator handles the loan comparison, while this tool can estimate the new account's starting balance.