You can set up a mortgage in QuickBooks Desktop and show principal, interest, and escrow payments as described in this article. Note that the accounts used here are for illustration purposes only. Please consult your accounting professional for the accounts you need to use.
To track escrow activity, create three accounts.
- From the QuickBooks Lists menu, choose Chart of Accounts.
- Right-click anywhere and click New.
- Create a loan account.
- Click the Other Account Types drop-down and choose Long Term Liability, then click Continue.
- In the Name field, enter the name of the loan.
- Click the Enter Opening Balance button and in the Opening Balance field, enter the full (beginning) amount of the loan.
- In the as of field, enter the loan origination date.
- Click Save & New.
- Create an escrow account.
- From the Type drop-down list, choose Other Current Asset.
- Enter a name for the account (Escrow, for example), the Opening Balance amount (if there have been any prior payments), and the as of date.
- Click Save & New.
- Create an expense account.
- From the Type drop-down list, choose Expense.
- Enter a name for the account (Interest, for example).
- Click OK.
To make a mortgage payment:
- From the Banking menu, choose Write Checks.
- Choose the appropriate supplier then enter the amount of the payment.
- On the Expenses tab, enter the account/s you have created and the appropriate amount/s. You will normally get the amount information from your lending institution. Note: QuickBooks does not do loan amortization.
- Click Save & Close.
- Make transfers from the escrow account:
- From the Lists menu, choose Chart of Accounts.
- Double-click the escrow account to open its Register.
- Enter the amount in the Decrease column, and then select the Expense account. Note: You can create accounts depending on the expenses that make up your escrow payment.
- After making the correct entries, click the Record button.
If you do not want to track escrow activity:
- Create the three accounts as described, but in place of the Asset account, create additional Expense accounts for the escrow amounts.
- Make a mortgage payment using the escrow expense account/s instead.