Rising escrow payments are eating into Americans’ budgets, creating an even bigger barrier for people trying to enter the housing market this year, according to a new report.
These escrow payments, the portion of a monthly mortgage that goes toward property taxes and homeowners insurance, are considered one of the biggest risks to the U.S. housing market in the new year, threatening market participation, according to the Cotality 2026 property market trends analysis.
The analysis closely examined how these payments, which are already hammering current homeowners, will continue to rise in the new year.
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In 2025, non-mortgage costs, which are essentially expenses required to own a home but not part of the loan and collected and paid by the lender, jumped 30%. However, some states, particularly those where natural disasters are more common, faced a steeper rise in costs.
For instance, in Florida and Colorado, escrow payments increased 55% and 57%, respectively, in 2025, according to Cotality’s analysis. Insurance premiums in those states were the primary driver of the escrow spike.
Cotality projected that things will only worsen with insurance premiums rising 8% across the country in 2026, outpacing inflation.
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These costs can deter more buyers “from entering the housing market, ultimately affecting their ability to achieve homeownership,” Cotality principal economist Archana Pradhan said.
It comes as a growing number of would-be buyers have been sidelined from the market in recent years due to higher borrowing costs and elevated home prices.
Meanwhile, Realtor.com Senior Economist Jake Krimmel told FOX Business that one of the benefits of owning a home is the certainty over monthly payments. But this data underscores how that certainty is waning.
“Typically a fixed-rate mortgage alone tends to ensure payments don’t fluctuate too much for homeowners. But that certainty over stable monthly payments is under threat,” he said. “Between rising insurance premiums and property taxes, the cost of homeownership moving forward is far from certain for millions.”
Two things are happening simultaneously, which is making homeownership feel out of reach. Not only are these costs eating into household savings, but the tax and insurance uncertainty makes it harder for families to budget, Krimmel said.
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Coupled together, these “trends are beginning to undermine the financial stability that homeowners had long taken for granted.”
Krimmel also warned that the increase in escrow payments is not only an indication that homeowners are paying more in property insurance, but a proxy for increased risk of natural disasters like floods or wildfires, presenting “real risks moving forward” for homeowners.
Snapshot of a mortgage-related escrow payment: PNC
- Property taxes
- Homeowners insurance premiums
- Any required flood insurance
- Any required mortgage insurance (such as private mortgage insurance (PMI) for conventional loans or mortgage insurance premiums (MIP) for FHA loans)
Escrow payments don’t include:
- Any homeowner’s association (HOA) dues
- Utilities (water, sewer, trash, electric, cable, phone, or internet)
- Home maintenance or home repair expenses.
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