To waive escrows means to opt out of having an escrow account that is typically used by lenders to collect and pay for property-related expenses such as taxes, homeowners’ insurance, and sometimes mortgage insurance on behalf of the borrower. 

When you have a mortgage, lenders often set up an escrow account to ensure these expenses are paid on time. The lender collects a portion of these costs as part of the monthly mortgage payment and holds the funds in escrow until they are due. 

When a borrower waives escrows, they are taking responsibility for paying these expenses directly, rather than having the lender manage them. This can lower the monthly mortgage payment since it won’t include escrow contributions, but it also means the borrower must make sure to pay taxes and insurance on their own. In some cases, lenders may require the borrower to meet specific conditions, such as a larger down payment or a higher credit score, to waive escrows. 

 Typical Requirements for Waiving Escrows:  

• Proof that the policy has been paid current is required. A declaration page stating that the policy has been paid in full or a paid-in-full invoice must be provided. 

• Financial ability to handle lump sum (annual) payments. 

• Not allowed for FHA and USDA Home Loans 

Pros of Waiving Escrows: 

• Lower monthly mortgage payments 

• More control over when and how taxes and insurance are paid 

 Cons of Waiving Escrows: 

• Borrower must budget for large, periodic payments (taxes and insurance) 

• Risk of missing payments, which could lead to penalties or loss of insurance 

We believe in giving choices to borrowers so they can determine what best fits them — that’s why we allow escrow waivers up to 95% LTV on most conventional loans with no escrow waiver fee. This can reduce your buyer’s cash needed for closing by thousands of dollars and result in a lower monthly payment.   

Waiving escrows is not applicable to all home loan programs. Terms and conditions may apply.