May 11, 2021

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FHA Loans And Escrow Requirements: A Reader Question

108A reader asks, “I am trying to cancel my escrow acct. with (my lender) due to them selling my Mortgage loan to an undesirable finance company called (name deleted). I was informed that all FHA loans are required to have an Escrow account. Please inform me of my rights.”

FHA loan rules do not require an escrow account in every case, but your lender might. According to the FHA/HUD official site, we find the following on the page titled HUD RESPA FAQs. The Real Estate Settlement Procedures Act, also known as RESPA, governs escrow accounts for home loans.

Under RESPA there is no requirement for escrow. From the HUD official site:

“Does RESPA require borrowers to maintain an escrow account?

NO. It is the lender’s decision whether the borrower must maintain an escrow account for the purpose of paying taxes and other items. The HUD regulations only limit the maximum amount that a lender can require a borrower to maintain in an account.”

However, under FHA loan rules there are circumstances where the lender is REQUIRED to establish an escrow account. Regardless of the fact that escrow is not required in all cases by FHA loan rules, the lender’s standards may require it.

The reader question doesn’t specify whether the lender was trying to imply FHA loan rules require escrow (which may be true depending on circumstances) or if the lender’s own standards dictate the use of escrow.

In cases where there’s a dispute about escrow, borrowers are encouraged to call the FHA directly at 1-800 CALL FHA to get clarification on FHA rules. Keep in mind that lender standards will apply if they are applied in accordance with federal law. Just because the FHA does not require escrow doesn’t mean the lender is forbidden from doing so.

Do you have questions about FHA home loans? Ask us in the comments section. You can get information about applying or getting pre-approved for an FHA loan at, a private company and not a government website.


Joe Wallace - Staff Writer

By Joe Wallace

July 22, 2014

Joe Wallace has been specializing in military and personal finance topics since 1995. His work has appeared on Air Force Television News, The Pentagon Channel, ABC and a variety of print and online publications. He is a 13-year Air Force veteran and a member of the Air Force Public Affairs Alumni Association. He was Managing editor for for (8) years and is currently the Associate Editor for

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About was launched in 2010 by seasoned mortgage professionals wanting to educate homebuyers about the guidelines for FHA insured mortgage loans. Popular FHA topics include credit requirements, FHA loan limits, mortgage insurance premiums, closing costs and many more. The authors have written thousands of blogs specific to FHA mortgages and the site has substantially increased readership over the years and has become known for its “FHA News and Views”.

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