An escrow account for taxes and insurance is commonly referred to as what type of mortgage?

A mortgage where an escrow account is established for the purpose of collecting and managing funds for property taxes and homeowners insurance is commonly referred to as a budget mortgage. This type of mortgage allows borrowers to pay a consistent monthly amount that encompasses not only the principal and interest on the loan but also includes contributions toward these additional costs. By incorporating property taxes and insurance into the monthly payment, borrowers can more accurately budget their overall housing expenses and avoid larger, lump-sum payments that may be more difficult to manage when due.

In contrast, conventional, high-ratio, and interest-only mortgages do not typically include an escrow arrangement as a standard feature. A conventional mortgage simply refers to mortgages that are not insured or guaranteed by the federal government, and they may or may not have escrow accounts. High-ratio mortgages typically refer to loans that have a Loan-to-Value ratio greater than 80%, which may require insurance but does not define the practice of including escrow for taxes and insurance. An interest-only mortgage allows borrowers to pay only interest for a specified period, without incorporating an escrow account for property taxes and insurance. Thus, the budget mortgage is the accurate term for the arrangement that includes those costs in the monthly payment.