Why Your First Mortgage Payment Might Be Higher Than You Expected in Florida (Escrows Explained)

If you're buying in Miramar, Pembroke Pines, Hollywood, Weston, or anywhere across Broward, Miami-Dade, and Palm Beach, this breakdown helps you budget correctly before you see that first statement.

1) What makes the first payment different

Your first mortgage payment can feel shockingly high for two main reasons:

Reason #1: Prepaid interest from closing date to month-end

When you close mid-month, you pay per-diem interest for the remaining days of that month at closing. Then your first regular payment is due the following month.

Think of it as two different time periods being paid close together: one at closing (interest for the rest of the month), and one after (your normal monthly payment).

Example:

• You close on June 15

• At closing, you pay prepaid interest for June 15–30 (about 15 days)

• Your first regular monthly payment is due August 1 (covering July)

• Some buyers see both charges hit close together and panic

Reason #2: Escrow setup can front-load costs

At closing, lenders collect an escrow cushion (typically 2–4 months of estimated taxes and insurance) to ensure there's enough in the account to pay bills when they're due.

This is separate from your down payment and closing costs, but it still reduces your available cash right after closing. For a full picture of what closing costs include in South Florida, review average closing costs by county in 2026.

2) Your "regular" monthly payment (what you'll actually pay going forward)

After the first month settles, your ongoing payment is PITI + HOA:

• P = Principal (paying down the loan balance)

• I = Interest (cost of borrowing)

• T = Property taxes (escrowed monthly, paid by lender annually or semi-annually)

• I = Homeowners insurance (escrowed monthly, paid by lender when due)

• HOA = Homeowner association dues (if applicable; usually paid separately, but affects total housing cost)

Important: In Florida, insurance and taxes can swing your payment by hundreds per month, even when the mortgage amount stays the same. That's why understanding what Florida buyers should budget for home insurance in 2026 matters before you write an offer.

If you want numbers that reflect real escrow costs and not just estimates, this is something we review during pre-approval.

3) Why escrows feel "extra" (but they're not)

Many first-time buyers budget only for principal and interest, then feel blindsided by escrows.

Here's the reality:

• You're going to pay taxes and insurance anyway whether escrowed or not

• Escrow just spreads those costs across 12 months instead of forcing you to save lump sums

• The lender holds the funds and pays the bills on your behalf

The "extra" feeling comes from seeing it all lumped into one monthly payment. But the alternative (saving separately and paying big bills twice a year) is usually harder for most buyers.

Lenders require escrows not to inflate your payment, but to ensure taxes and insurance are paid on time, protecting both you and the property.

If you're trying to understand the true cost of owning a home in South Florida beyond just the mortgage, this is where many buyers realize ownership is more than the loan payment alone.

4) The escrow "cushion" explained (why setup feels big)

At closing, your lender collects an initial escrow deposit to build a reserve. Federal rules allow lenders to hold up to two months of escrow expenses as a cushion to cover timing gaps.

What this looks like in real life:

• Annual insurance premium: $4,800 ($400/month)

• Annual property taxes: $6,000 ($500/month)

• Total monthly escrow: $900

• Escrow cushion at closing: Often 2–4 months ($1,800–$3,600)

This amount is credited to your escrow account, not lost,but it does increase your cash needed at closing.

5) Florida-specific payment surprises (what catches buyers off guard)

Insurance volatility

South Florida insurance premiums can be significantly higher than other states, and they can change at renewal. Even if your payment feels comfortable now, plan for adjustments. Many increases happen at the first renewal, which often occurs within the first 6–12 months after purchase.

Many buyers don't realize how much Florida home insurance impacts monthly affordability until after they've committed to a property.

Property tax reassessment

When you buy, the county can reassess your property at or near your purchase price. The seller's old tax bill may not reflect what you'll pay after reassessment and before homestead exemption kicks in.

This is especially common for buyers moving from renting or from another state, where reassessment rules differ.

HOA/condo costs that aren't escrowed

HOA dues are typically not escrowed; you pay them separately. But they still affect your total monthly housing cost and your debt-to-income ratio for loan approval.

For context on what's normal, review HOA fees in Florida and which amounts are red flags in 2026.

6) How to avoid "first payment shock" (prep checklist)

These questions don't make you difficult; they make you prepared.

Before you close:

• [ ] Ask your lender for a detailed closing disclosure at least 3 days before closing

• [ ] Confirm your first payment due date and what it includes

• [ ] Ask how much prepaid interest you'll owe based on your closing date

• [ ] Review the initial escrow deposit amount

• [ ] Budget beyond just down payment and closing costs. Reserve funds for that first payment window

After you close:

• [ ] Set up auto-pay or calendar reminders for your first payment

• [ ] Review your escrow analysis statement annually

• [ ] Plan for potential payment adjustments at renewal (insurance increases, tax changes)

If you're still planning your cash-to-close budget, start here: how much cash Florida buyers really need in 2026, including reserves and escrows.

7) Common questions (FAQ)

Is my first mortgage payment always higher?

Not always "higher," but it often feels higher because prepaid interest and escrow setup happen close to your first regular payment.

Can I skip escrow?

Some lenders allow escrow waivers if you put 20% down or meet other criteria. But you're still responsible for paying taxes and insurance on time.

Why does my payment change after the first year?

Your principal and interest stay the same (on a fixed-rate loan), but taxes and insurance can increase, which adjusts your escrow payment.

Does homestead exemption help right away?

No. Homestead exemption typically applies starting the year after you file, so your first year of taxes may be higher than future years.

Can my first payment be lower than expected?

Occasionally, yes, if you close very late in the month and prepaid interest is minimal. But most buyers should plan for the first payment to feel higher, not lower.

Final takeaway

Your first mortgage payment in Florida might feel higher than expected, but once you understand escrows, prepaids, and the timing of your first statement, it's predictable. Budget for PITI + HOA from day one, not just principal and interest. Plan for escrow setup at closing. And treat insurance and taxes as core housing costs, not "extras."

When you know what's coming, your first mortgage payment becomes a confirmation and not a surprise.

For buyers in Miramar, Pembroke Pines, Hollywood, Weston, and across Broward, Miami-Dade, and Palm Beach, this knowledge prevents panic when that first mortgage bill arrives.

Next steps

If you want a realistic payment estimate that includes escrows, insurance, taxes, and HOA before you commit:

• Get pre-approved in minutes: Start your application now

• Explore Florida homebuyer programs: Learn about low-down-payment and first-time buyer options

• Book a strategy call: Schedule a call to review your plan and avoid costly mistakes

EZ Funding Group, Inc. NMLS #349022 | Jaime Charouf NMLS #348964 | Equal Housing Lender