A recent Yahoo Finance article shed light on a growing issue impacting homeowners across the country: escrow shortages. If you’ve received a surprise notice in the mail saying your monthly mortgage payment is increasing due to property taxes or insurance, you’re not alone—and you’re not imagining things.
At Home Tax Solutions, we work with Texas homeowners every day who are trying to make sense of rising bills, especially when it comes to property taxes in Texas. Let’s break down what’s happening—and how we can help.
What Is an Escrow Shortage?
Most homeowners with a mortgage have an escrow account. These accounts are used by mortgage servicers to collect and hold funds for property taxes and insurance, which are paid on your behalf. Each year, your mortgage servicer reviews whether the amount collected was enough to cover these costs.
If your escrow account comes up short—usually due to increased property taxes or rising insurance premiums—you’ll get a letter outlining the shortage. That gap has to be covered, either through a lump sum or higher monthly payments moving forward.
In 2025, many homeowners are seeing their monthly mortgage payments increase by $100 or more just from these adjustments. This comes at a time when home prices and mortgage rates are already stretching household budgets.
Why Are Escrow Shortages Happening More Often?
One major reason: property taxes are rising across the country, especially in states like Texas where there is no state income tax. Since local governments rely on property taxes to fund schools, roads, and emergency services, they reassess property values regularly.
If your home’s value has increased since the last assessment—and especially if you’ve purchased new construction—you may be caught off guard by a spike in your tax bill. And when that tax bill increases, your escrow account needs more funds to stay balanced.
Some homeowners are learning this the hard way, with shortage notices in the thousands, leaving them scrambling to cover the difference.
How Is Property Tax Determined in Texas?
Many clients ask us: how is property tax determined in Texas? The answer is fairly straightforward. Your county’s appraisal district sets the market value of your home as of January 1 each year. That value is then multiplied by your local tax rate—which includes your city, county, school district, and other taxing entities—to calculate what you owe.
Here’s the general formula if you’re wondering how to calculate property tax in Texas:
Appraised Value × Local Tax Rate = Annual Property Tax
In 2025, property tax rates in Texas vary from about 0.64% in rural counties like Sabine County to over 2.4% in high-growth areas like Fort Bend County.
What You Can Do If You’re Facing an Escrow Shortage
If you’re hit with an unexpected escrow shortage due to rising property taxes in Texas, here are a few steps to take:
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Review your escrow analysis carefully: Check if the calculation is accurate. Mistakes happen, especially with new builds or recent purchases.
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Monitor your property tax assessments: You can usually file a protest if you believe your home is overvalued.
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Shop around for insurance: Premium increases are also a common driver of escrow shortages.
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Talk to your mortgage servicer: You may be able to spread out the shortage over 12 months instead of paying it all at once.
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Consider a property tax loan: That’s where we come in.
How Home Tax Solutions Can Help
If your escrow shortage is caused by unpaid or rising property taxes, a property tax loan can help you avoid late fees, interest, and stress. At Home Tax Solutions, we offer fast, affordable loans specifically for covering property taxes in Texas.
Whether you’ve just received a notice or you’re trying to plan ahead for future tax increases, we’ll work with you to create a repayment plan that fits your budget—without risking your home.
Contact us today to learn how we can help you stay current on your property taxes and avoid the burden of escalating escrow shortages.
