How this estimate works

The estimate compares annual tax and homeowners-insurance amounts you enter, adds any stated shortage repayment, and shows a simplified monthly result. It is not a full servicer analysis.

Inputs

Previous monthly escrow: The monthly escrow portion of the payment before the changes you are reviewing.
Previous and new annual property tax: The earlier and updated yearly property-tax amounts you want to compare.
Previous and new annual homeowners insurance: The earlier and updated yearly homeowners-insurance premium amounts.
Escrow shortage: An optional non-negative amount shown in a statement. Blank and zero both mean no shortage was entered.
Repayment period: When a shortage is greater than zero, the whole number of months over which you want to spread it. This estimator accepts 1 through 60 months.
Previous total monthly payment: Optional. When supplied, the estimate also shows a simplified total payment using this starting amount.

Calculation steps

Subtract the previous annual tax from the new annual tax, then divide that change by 12.
Subtract the previous annual insurance from the new annual insurance, then divide that change by 12.
Add the separately rounded monthly tax and insurance changes to get the permanent monthly change.
If a positive shortage is entered, divide it by the repayment period to estimate a temporary monthly payment.
Add the permanent change and temporary repayment to the previous monthly escrow amount. The after-shortage estimate omits the temporary repayment.

When a previous total monthly payment is supplied, the same permanent and temporary changes are added to that starting total.

Permanent change

The tax and insurance differences are treated as ongoing monthly changes for this estimate. They may not be the only future changes to a payment.

Temporary change

A shortage repayment is shown separately because it may end after the selected period. The after-shortage estimate assumes no other amounts change.

Rounding

Amounts are parsed as integer cents. Each annual tax or insurance difference is divided by 12 and rounded to the nearest cent using half away from zero. A shortage divided by its selected month count uses the same rule. The permanent change is the sum of the displayed monthly tax and insurance changes; payment estimates add those displayed components so the breakdown reconciles. This is the estimator’s policy and may differ from a servicer’s method.

Results use method version web-estimator-v1. An estimate below zero is stopped with an explanation rather than shown as a negative escrow payment.

Where an official analysis differs

A servicer’s analysis may use an opening balance, expected deposits, specific disbursement dates, projected monthly balances, a target balance, cushion or reserve, and additional escrow items. Federal escrow requirements have a defined scope, and mortgage documents or other rules may matter. This estimator does not decide which requirements apply to an individual loan.

It does not reconstruct a trial running balance or calculate a cushion.
It does not analyze surplus, deficiency, shortage rules, statement compliance, or legal rights.
It does not model midyear changes, servicing transfers, delinquency, force-placed insurance, or special loan-program cases.

Sources and scope

Public sources support limited background statements about escrow accounts, changing tax and insurance costs, and the additional steps in an escrow analysis. They do not validate this simplified estimator as an official analysis.

Last reviewed: 2026-09-24. See the calculator or read the disclaimer.