Escrow account
Also called: Impound account
An account your mortgage servicer uses to collect part of your property taxes and homeowners insurance each month and pay those bills for you.
Each monthly mortgage payment includes an escrow portion — roughly one-twelfth of your yearly property taxes and insurance premiums. The servicer pays the bills when they're due.
Servicers review the account once a year. If taxes or insurance went up, your payment rises to cover the shortage; if the account has a surplus above the allowed cushion, you get a refund. Escrow is usually required on FHA loans and on conventional loans with less than 20% down.
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Disclaimer: Definitions are general education, not financial, tax, or legal advice. Figures are for the 2026 tax year unless noted.