Impound Account

· 2 min read
An impound account is just another name for an escrow account — it’s a holding account where your mortgage servicer collects and stores money for…

An impound account is just another name for an escrow account — it’s a holding account where your mortgage servicer collects and stores money for property taxes and insurance. The term “impound” is more common on the West Coast, while “escrow” dominates everywhere else. Same thing, different label.

How Impound Accounts Work

Your lender adds a portion of your annual property taxes and insurance to each monthly mortgage payment. They park that money in the impound account and pay the bills when they’re due. California, Oregon, and Washington lenders tend to call this an impound account. Everyone else calls it escrow.

The rules are identical regardless of the name. Federal RESPA guidelines limit how much servicers can require — generally no more than two months of cushion beyond what’s needed to cover upcoming bills.

Dollar Example

Same as escrow: your $5,400/year in property taxes plus $1,800 in insurance means $600/month into your impound account. At closing, you’ll prepay roughly two months’ cushion — about $1,200. Your total monthly mortgage payment includes principal, interest, and the $600 impound amount.

Watch Out

In California, lenders can’t require an impound account if your loan-to-value ratio is 90% or below (meaning you put at least 10% down). That’s a state-specific rule — most other states let lenders require escrow/impound up to the 80% LTV threshold. Know your state’s rules before assuming you can opt out.

If you waive your impound account, you’re on the hook for paying property taxes and insurance yourself. Miss a property tax payment and the county puts a lien on your house. Miss insurance and your lender force-places expensive coverage at your cost. Use our mortgage calculator to budget for these expenses either way.

Frequently Asked Questions

Is an impound account different from an escrow account?

No. They’re identical. “Impound” is the West Coast term; “escrow” is used everywhere else. Your rights, protections, and annual analysis requirements are the same regardless of the label. Check your home buying guide for more on managing housing costs.