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About

For most single-family homeowners, property tax is the largest carrying cost after the mortgage interest. This calculator determines the annual tax liability based on state-level effective tax rates and estimates the monthly amount required for a mortgage escrow account.

Lenders typically require an escrow buffer (often 2 months of payments). This tool helps forecast the actual cash flow impact of purchasing a home in high-tax jurisdictions like New Jersey versus low-tax areas like Hawaii.

property tax mortgage escrow homeowner tax real estate housing expenses

Formulas

The calculator uses the effective tax rate formula:

Tannual = Vhome × reff100

Escrow calculation:

Pmonthly = Tannual12

Reference Data

State / CountryAvg. Effective RateAnnual Tax on $400k
New Jersey, USA2.49%$9,960
Illinois, USA2.27%$9,080
New Hampshire, USA2.18%$8,720
Texas, USA1.80%$7,200
Florida, USA0.89%$3,560
California, USA0.76%$3,040
Hawaii, USA0.28%$1,120
United KingdomBand D Avg~£1,966
Germany0.25% - 1.0%Varies by Hebesatz

Frequently Asked Questions

It is the total tax paid divided by the home's market value. Since assessed values often differ from market values, the "effective" rate is the best way to compare tax burdens across different states.
They are benchmarks. Within a state like Texas, rates can vary from 1.5% to 3.0% depending on the specific school district and county levies. Always check the specific county tax assessor's website for exact millage.
If your property taxes increase, your lender will increase your monthly payment to cover the new bill and replenish any shortage in the escrow account buffer.
In the US, the SALT (State and Local Tax) deduction allows you to deduct property taxes, but it is currently capped at $10,000 per year (combined with income tax) for federal returns.