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What is an Escrow Account?

The escrow account is an interest-bearing account established by the housing authority for each participating FSS family. Escrow earnings are based solely on the family’s earned income (wages from employment). The family must receive an increase in earned income to become eligible for an escrow credit. Once eligibility is determined, a monthly credit is made to the escrow account on the family’s behalf. At the discretion of the housing authority, once certain interim goals have been met, the family may use a portion of the escrow funds for purposes consistent with the contract of participation. Once the family has successfully fulfilled the terms of the contract of participation, a final disbursement of all escrow funds will be disbursed to the head of household.  A portion or all of the escrow funds may be used as a down payment towards the purchase of a home.

UNDERSTANDING ESCROW as it Relates to FSS Program

The goal is for an FSS participant to be an "escrow earner".

How the Escrow Account Works:

  • The general concept of the escrow account is that FSS families continue to pay rent in accordance with their incomes (even as their incomes increase due to employment income).
  • As a rule, the amount of the increase in family rent resulting from an increase in earned income is escrowed. Because there are other factors that affect the family rent, it will not necessarily be dollar for dollar.
  • If during the contract term the family rent becomes less than the family rent on the effective date of the contract, there is no escrow credit.
  • The escrow credit for a Section 8 FSS head of family comes from the Housing Assistance payments (HAP) Account. Generally, it is the amount that the family rent to owner increases due to an increase in earned income.


  • The PHA (Public Housing Authority) may, at its sole option, disburse a portion of the funds from the head of family's escrow account during the Contract period for Contract-related expenses if the Head of family:
    • Has fulfilled certain interim Contract goals, and
    • Needs a portion of the FSS account funds for purposes consistent with the Contract such as:
      • School tuition or other school costs (head of Family only)
      • Job training expenses
      • Business start-up expenses
      • Car when public transportation is unavailable or inaccessible to the family

Final Disbursement

  • The head of family may use the final disbursement of escrow account funds without restriction.