The full explanation
It is factored in when the account is opened and in each annual analysis, when the servicer figures your escrow payments for the coming year.
An example
Reviewing his annual escrow statement, Fernando sees that the servicer keeps a cushion in the account. He asks how much it is and how it was calculated.
With real numbers
Computed with official data for the whole U.S. In your county the numbers may differ.
- Typical tax per month
- $260
- 2-month cushion
- $520
The federal rule lets your servicer keep a cushion of up to 2 months of payments in your escrow. With just the typical U.S. tax ($260 a month), that cushion could reach $520.
Computed with: American Community Survey (ACS) 5-year estimates (2020–2024) · 12 CFR §1024.17(c)(1)(ii) — Escrow accounts: limits on payments (cushion) (October 16, 2026)
You will see it in…
- The initial escrow account statement, when the account is opened
- The annual analysis of your escrow account
- Letters from your servicer explaining a change in your monthly payment
