how long does the escrow account have to be active on a higher-priced mortgage loan

February 28, 2026

Quick Scoop

Five Years Required for Higher-Priced Mortgage Loans

For higher-priced mortgage loans, the escrow account must remain active for five years from the date of origination. This requirement was established by the Consumer Financial Protection Bureau (CFPB) through a final rule issued in January 2013, which went into effect on June 1, 2013. Before this rule change, escrow accounts only needed to be maintained for one year.

What Changed and Why

The Dodd-Frank Act prompted the CFPB to extend escrow account requirements for higher-priced mortgage loans from one year to five years. This change applies specifically to first-lien higher-priced mortgage loans (HPMLs) and was designed to provide additional consumer protection. The new rule applies to loan applications received on or after June 1, 2013.

When Can You Cancel Your Escrow Account?

After the mandatory five-year period, homeowners can request to cancel their escrow account, but only under certain conditions. The cancellation can occur:

Upon termination of the underlying debt obligation
After five years from origination, but only upon the customer's written request

It's worth noting that even after the five-year mark, some lenders may still require you to maintain an escrow account depending on your loan-to-value ratio and payment history.

Exceptions to the Five-Year Rule

Not all higher-priced mortgage loans are subject to this five-year escrow requirement. There are several exceptions, including:

Loans from qualifying small creditors that operate predominantly in rural or underserved areas

Common interest communities such as condominiums where participation in a governing association is required

Financing for the construction of a dwelling

Bridge loans with terms of twelve months or less

However, if a creditor plans to sell the loan to another creditor that doesn't meet the exception requirements, an escrow account must still be established at origination.

State-Specific Variations

While federal regulations set the five-year minimum for higher-priced mortgage loans, individual states may have additional requirements. Some states require escrow accounts to remain active for a minimum of five years before homeowners can even request cancellation, while others have different loan-to-value thresholds. For example, California has a minimum LTV ratio of 90% for escrow requirements, which differs from the standard 80% LTV ratio used in most states.

TLDR: Escrow accounts for higher-priced mortgage loans must be maintained for five years from origination, a requirement established by the CFPB in 2013 under the Dodd-Frank Act. After five years, borrowers can request cancellation, though certain exceptions apply for small creditors, construction loans, and other specific situations. Information gathered from public forums or data available on the internet and portrayed here.