Escrow Shortage Calculator

Decode a mortgage escrow shortage letter. See how much the account is short, what the new base escrow payment will be, and compare paying the shortage in a lump sum versus a 12-month spread.

Current loan and escrow

Principal + interest payment

Just the loan portion, not tax or insurance.

Current escrow payment

Current escrow balance

Check the latest mortgage statement.

Projected annual escrow disbursements

Property tax (annual)

Homeowners insurance (annual)

Flood insurance (annual)

Mortgage insurance / PMI (annual)

Escrowed HOA / other (annual)

Cushion

months

RESPA caps the cushion at 2 months of escrow.

Projected shortage

to restore required cushion

New monthly escrow (base)

$573

+$33 vs current

Annual escrow disbursements

$6,880

Required cushion

$1,147

Repayment options

Projected surplus of $553. If the surplus is over $50 under RESPA, the servicer must refund it within 30 days of the annual analysis.

Option A: Lump sum + new base payment

Pay the shortage at once, then reset to the new base escrow payment.

Lump sum due$0

New monthly payment$2,223

Change vs current+$33/mo

Option B: 12-month spread

Spread the shortage across the next 12 payments — no lump sum required.

Shortage / 12$0/mo

New monthly payment$2,223

Change vs current+$33/mo

Shortage math: required cushion minus projected low-point of the escrow account over the next 12 months. The projected low point equals current balance + (current monthly escrow × 12) − projected annual disbursements. RESPA caps the cushion at 2 months of average monthly escrow.

How to Use

Enter the principal and interest portion of your mortgage payment and your current escrow amount from the latest statement.
Enter the current escrow balance the servicer is holding — usually shown on the annual escrow analysis letter.
Update the projected annual property tax and homeowners insurance premiums for the coming year.
Set the cushion in months — RESPA caps this at 2 months of average monthly escrow.
Compare the two repayment options so the new monthly mortgage payment is not a surprise.

Frequently Asked Questions

Why did my escrow come up short?

The two most common causes are a property tax reassessment (often after a purchase or a nearby sale) and a homeowners insurance premium increase. Both are paid from escrow, so the old monthly amount collected from you is no longer enough to cover the new bills and the cushion.

What is the escrow cushion?

The cushion is a reserve the servicer holds to protect against timing mismatches between deposits and disbursements. Under RESPA, the cushion is capped at two months of average monthly escrow. Your servicer sets the exact number in the analysis.

Is a lump sum or a 12-month spread better?

If cash flow is tight, the 12-month spread keeps monthly impact smaller. If you have cash on hand, paying the lump sum keeps the new base monthly payment lower for the next 12 months. Financially they're equivalent — no interest is charged either way.

What happens if I'm getting a surplus instead?

Under RESPA, if the surplus is $50 or more, the servicer must refund it within 30 days of the annual analysis. Smaller surpluses are usually applied against the next year of escrow. The new monthly escrow payment should drop either way.

Can I remove escrow and pay tax and insurance myself?

Some lenders allow escrow waivers once a loan has enough equity (typically 20%). You keep full responsibility for timely payments — and lenders may charge a waiver fee or higher rate. Compare the cash-flow benefit against that extra cost before requesting a waiver.