A mortgage escrow account is an account your servicer holds to pay your property taxes and homeowners insurance for you. Each month, your payment includes principal and interest plus roughly one-twelfth of the expected yearly tax and insurance bills, and mortgage insurance if your loan has it. When the bills come due, the servicer pays them from the account. At closing, you fund an initial deposit so the account has enough when the first bills arrive. Federal rules limit how much extra the servicer can hold as a cushion (12 CFR 1024.17).
HOA dues are usually paid directly to the association, not through escrow. The CFPB explains the basics (CFPB).
At closing, the lender collects enough to cover the gap between your first payment and the next tax and insurance due dates, plus the allowed cushion. The cushion cannot exceed one-sixth of the estimated total annual disbursements, which is about two months of escrow payments. You also usually pay the first year of homeowners insurance in full at or before closing. These amounts show in the Initial Escrow Payment at Closing section of your Loan Estimate and Closing Disclosure. See prepaid items.
Escrow deposits can change between the Loan Estimate and the Closing Disclosure without a tolerance limit, because they depend on actual bills and dates (12 CFR 1026.19(e)(3)(iii)). See which fees can change.
Texas property taxes are generally billed in the fall and become delinquent if not paid before February 1 of the following year (Tax Code 31.02). Servicers usually pay them late in the year or in January. Because Texas taxes are large relative to the payment, the tax part of escrow is often a big share of the monthly amount. See Texas property taxes.
The account does not lock the tax or the premium. When those bills change, the servicer runs an annual analysis and resets your escrow payment. A shortage or surplus is handled under federal rules. See why escrow can come up short.
Fictional example: a buyer adds up principal and interest and assumes that is the whole payment. The Loan Estimate's projected payments table shows separate lines for estimated escrow, covering Tarrant County property taxes and homeowners insurance, plus mortgage insurance. The buyer also sees an initial escrow deposit in the closing costs. The buyer now budgets for the full monthly payment and the deposit, not just the loan payment.
If you want to see your full payment with Tarrant County taxes and insurance built in before you shop, I can run it for you. Book a call, or start an application.
Links checked Oct 21, 2026.
About the author: McKade Lively, NMLS 2704474, American Pacific Mortgage Corporation dba True North Home Loans, NMLS 1850.
Equal Housing Opportunity.
Last reviewed: Oct 2026