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.