Frequently Asked Question: Do I Have to Set Up an Escrow Account with an FHA Mortgage?

Frequently Asked Question: Do I Have to Set Up an Escrow Account with an FHA Mortgage?

Q: I was told that with an FHA loan, I have to pay everything to the escrow company. Is that true? I read an article that said some lenders charge a monthly escrow fee that can be avoided by paying taxes, insurance and principle/interest separately. But because I'm doing an FHA loan, I don't have a choice.

A: You are required to establish an escrow account for property taxes and homeowner's insurance premiums with all FHA mortgages. There's no provision to waive escrow accounts. There's also no fee for establishing or maintaining such an account. However, a minimum 2 month's reserves for taxes and insurance must be in the escrow account at all times.