Mortgage PITI Calculator

The Property Tax Rate field above computes your estimate off whatever taxable value you enter — usually the home's current assessed value, which is what a listing or a seller's most recent tax bill shows. That number is often stale the moment you buy: most counties reassess a property at or near its new sale price once a transfer closes, so a home that last sold (or was reassessed) years ago can carry an assessed value well below what you just paid.

Illustrative example (not a real jurisdiction's rates): a home last assessed at $310,000 sells for $450,000, in a county with a 1.35% property tax rate.

• Pre-purchase estimate (seller's assessed value): $310,000 × 1.35% = $4,185/year → $349/month
• Post-purchase reassessment (new sale price): $450,000 × 1.35% = $6,075/year → $506/month
• Gap: $157/month, or $1,890/year — about 45% higher than the pre-purchase figure, with nothing about the loan itself changing

This isn't a fringe case in California: under Proposition 13, a property's assessed value resets to the sale price at every change of ownership, then is capped at roughly 2% annual growth until the next sale — so a long-held home can be assessed far below market value right up until it sells, and the buyer's tax bill jumps to reflect the real price the day escrow closes. Many other states also treat a sale as a reassessment trigger, though the exact rules (frequency, caps, exemptions) are set county by county — check your county assessor's site for the actual mechanic before you close, rather than assuming your pre-purchase estimate is the final number.

Practical fix: keep Home Price above set to your actual purchase price — it also drives your loan amount, PMI and interest, so swapping in the seller's assessed value there would distort those too, not just the tax line. Instead, estimate the gap by hand: multiply the seller's current assessed value by the Property Tax Rate you entered and divide by 12, then compare that figure to the Taxes line this calculator already shows you.

The reassessment gap above explains why your first payment can run higher than this estimate. A second, separate jump often follows about a year later, and it catches even buyers who braced for the reassessment: your loan servicer performs an annual escrow analysis, comparing what it actually paid out in property tax and homeowners insurance over the past 12 months against what it collected from you each month. If the real bills came in higher than the estimate your escrow account was funded on, you owe the difference.

Illustrative example (not a real servicer's numbers): your escrow account was funded at closing using the seller's pre-reassessment tax bill and a first-year insurance quote. By the time the servicer runs its year-one analysis, the county has finished reassessing at the new sale price and your insurer's renewal premium has risen too.

• Escrow collected in year one: based on the original, pre-reassessment tax estimate and the first insurance quote
• Escrow actually owed: the reassessed tax bill plus the renewal insurance premium, both higher than what funded the account
• Result: a shortage the servicer recovers alongside a higher ongoing monthly payment going forward, sized to fully fund the new, higher estimate plus a legally permitted cushion. How the past shortfall itself gets collected depends on its size: a shortage smaller than one month's escrow payment can be billed as a lump sum due within 30 days; a shortage of a month's payment or more cannot be demanded as a lump sum at all — the servicer must either let it ride or spread it over at least 12 months (12 CFR 1024.17(f)(3))

This is separate from, and additive to, the reassessment gap above: the reassessment explains why the tax line was underestimated in the first place; the escrow shortage is your servicer catching up the account to reflect that (plus any insurance increase) roughly a year after closing, once a real annual analysis has actual bills to compare against instead of closing-time estimates. Federal rules (Regulation X) require an annual escrow account statement showing the analysis, and cap the cushion a servicer can hold at one-sixth of your yearly escrow disbursements — so a shortage notice should show its math, not just a new number.

Practical fix: this calculator's Taxes and Insurance lines are a snapshot at the rate and premium you enter today — they can't predict next year's reassessed bill or renewal quote. Re-run this calculator with updated property tax and insurance figures once your first annual escrow statement arrives, and budget for the possibility of a one-time catch-up payment in year two even if you did nothing wrong.