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  "name": "How do you calculate prepaid taxes and insurance at closing?",
  "description": "Prepaids = first-year insurance premium (paid in full) + 2–6 months of property tax and insurance escrow deposits + daily interest from closing to month-end. On a $400,000 home with 1.1% tax and $1,900 insurance, expect $3,500–$6,000.",
  "url": "https://www.revenuelab.fyi/answers/how-to-calculate-prepaid-taxes-and-insurance-at-closing",
  "dateModified": "2026-10-01",
  "creator": {
    "@type": "Organization",
    "name": "RevenueLab",
    "url": "https://www.revenuelab.fyi"
  },
  "license": "https://creativecommons.org/licenses/by/4.0/",
  "keywords": [
    "Closing Costs Calculator",
    "Rent vs Buy Net Worth Calculator"
  ],
  "distribution": {
    "@type": "DataDownload",
    "contentUrl": "https://www.revenuelab.fyi/api/public/page.json?path=answers%2Fhow-to-calculate-prepaid-taxes-and-insurance-at-closing",
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  "json": {
    "type": "answer",
    "question": "How do you calculate prepaid taxes and insurance at closing?",
    "shortAnswer": "Prepaids = first-year insurance premium (paid in full) + 2–6 months of property tax and insurance escrow deposits + daily interest from closing to month-end. On a $400,000 home with 1.1% tax and $1,900 insurance, expect $3,500–$6,000.",
    "tableTitle": "Prepaid worksheet: $400,000 home, closing November 15",
    "columns": [
      "Prepaid item",
      "Math",
      "Amount"
    ],
    "rows": [
      {
        "label": "Homeowners insurance, year 1",
        "value": "Full premium",
        "note": "$1,900"
      },
      {
        "label": "Property tax escrow (6 mo)",
        "value": "$4,400/yr ÷ 2",
        "note": "$2,200"
      },
      {
        "label": "Insurance escrow (2 mo cushion)",
        "value": "$158 × 2",
        "note": "$317"
      },
      {
        "label": "Prepaid interest (15 days)",
        "value": "$360k loan × 6.5% ÷ 365 × 15",
        "note": "$961"
      },
      {
        "label": "Total prepaids",
        "value": "—",
        "note": "≈ $5,378"
      }
    ],
    "context": "Closing date is a real lever: closing on the 28th instead of the 2nd cuts prepaid interest from ~28 days to ~2 (about $1,700 saved here), though your first payment arrives sooner. Taxes are prorated too — the seller credits you for the months they owned the home in the tax year, which offsets part of the escrow deposit. These aren't junk fees; they're your own bills arriving early, and the escrow cushion is capped by federal law at two months.",
    "methodology": "Tax at 1.1% of value, insurance $1,900/yr, 6.5% 30-year loan at 90% LTV. Escrow deposits sized per RESPA aggregate accounting with a 2-month cushion.",
    "dateModified": "2026-10-01",
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      {
        "label": "Closing Costs Calculator",
        "to": "/closing-costs-calculator"
      },
      {
        "label": "Rent vs Buy Net Worth Calculator",
        "to": "/rent-vs-buy-net-worth-calculator"
      }
    ],
    "relatedReading": [
      {
        "label": "How to calculate escrow fees",
        "to": "/answers/how-to-calculate-escrow-fees"
      }
    ]
  }
}