How much can lenders hold in escrow?

Mortgage and Lending NMLS License #113781

I have often been asked the question of how much a Texas mortgage lender can hold when a client establishes an escrow account for taxes and insurance.  Here's the answer:  Lenders can hold no more in escrow than the annual cost for such expenses as property taxes and insurance, plus a reserve equal to 1/6th of the required amount, plus $50.

If property taxes are $6,000 and property insurance is $1,800 the maximum escrow amount will look like this:

Property taxes = $6,000

Property insurance = $1,800

Subtotal = $7,800

1/6th of $7,800 = $1,300

$7,800 + $1,300 = $9,100

$9,100 + $50 = $9,150

In this example, the most that can be kept in the escrow account is $9,150.

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