Do You Need to Escrow for Taxes and Insurance?

2/20/2018 Greg Tally


Wondering if you have to escrow for taxes and insurance? You’re not the only person to ask about this. It’s actually a very common question asked by home buyers. The type of financing and down payment will determine if you have to maintain an escrow account in order to pay your annual taxes and insurance.

For a conventional mortgage, if you are putting less than 20% down payment down you are required to establish an escrow account.  Once you obtain your 20% equity position, you can request to have your escrow removed and you will then be responsible for the annual tax and insurance payment. Even after hitting the 20% equity position, you can continue to escrow.  Once the mortgage is paid in full, the escrow account will be closed.

Since FHA, VA, and Rural Housing loans are all government backed programs, you are required to establish and maintain the escrow account for the entirety of the loan.  So no matter what the loan to value of your property, an escrow account must be maintained in order to pay the taxes and insurance.

If you have more questions about mortgages or the home buying process, I'm happy to help you. You can reach me by email or phone at 217.726.0638


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