Property Taxes & Mortgage Escrow Explained: What Buyers Pay in PA, NJ, NY, FL, CA & GA
Two buyers can borrow the same amount at the same rate and have very different monthly payments — because of property taxes. For families shopping across PA, NJ, NY, FL, CA, and GA, the tax difference is large enough to change which homes you can afford. This guide explains the escrow account that collects those taxes and how the six states compare.
What a Mortgage Escrow Account Is
Most mortgage payments have four parts, often abbreviated PITI: Principal, Interest, Taxes, and Insurance. The principal and interest go to the loan. The taxes and insurance go into an escrow account — a holding account your servicer manages on your behalf.
Each month you pay one-twelfth of your annual property tax and homeowners insurance into escrow. When the tax bill and insurance premium come due, the servicer pays them for you. You never get a separate surprise tax bill — it has been collected steadily all year.
How Property Taxes Differ by State
Property tax is set locally, so it varies not just by state but by county and town. Still, the state-level pattern is real and worth knowing before you choose where to buy:
| State | Approx. effective property tax | Note |
|---|---|---|
| New Jersey | ~2.2% of value/year | Among the highest in the US |
| New York | ~1.6%–1.7% | Varies widely; high in many suburbs |
| Pennsylvania | ~1.4%–1.5% | Moderate; varies by county and school district |
| Georgia | ~0.9% | Below national average; homestead exemption helps |
| Florida | ~0.8%–0.9% | No state income tax; homestead exemption and assessment cap |
| California | ~0.7% effective | Proposition 13 caps assessed-value growth |
These are approximate averages — your actual rate depends on the specific county, town, and school district. The point is the spread: on a $400,000 home, the yearly tax can differ by $5,000 or more between New Jersey and California.
Homestead Exemptions Lower the Bill
Several states reduce the taxable value of a home you live in as your primary residence. Florida's homestead exemption is well known and also caps how fast your assessed value can rise each year; Georgia and others offer their own versions. These exemptions usually must be applied for after you buy — they are not automatic, and missing the deadline costs real money.
Escrow Shortages and the Annual Analysis
Plan With the Real Number
A mortgage quote that shows only principal and interest is only part of the story. Before you set a price range, the payment should be calculated with the actual tax rate for the county you are shopping in — that is the number that tells you what you can truly afford.
See Your True Monthly Payment Before You Buy
We calculate your full payment — principal, interest, taxes, and insurance — for the exact county and state you are shopping in, so there are no surprises.
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