diff --git a/esphome/yaml_util.py b/esphome/yaml_util.py
index f5e36b79e7..60705082b6 100644
--- a/esphome/yaml_util.py
+++ b/esphome/yaml_util.py
@@ -7,6 +7,7 @@ import logging
 import math
 import os
 import uuid
+from io import TextIOWrapper
 from typing import Any
 
 import yaml
@@ -19,7 +20,7 @@ except ImportError:
     FastestAvailableSafeLoader = PurePythonLoader
 
 from esphome import core
-from esphome.config_helpers import Extend, Remove, read_config_file
+from esphome.config_helpers import Extend, Remove
 from esphome.core import (
     CORE,
     DocumentRange,
@@ -418,19 +419,26 @@ def load_yaml(fname: str, clear_secrets: bool = True) -> Any:
 
 def _load_yaml_internal(fname: str) -> Any:
     """Load a YAML file."""
-    content = read_config_file(fname)
     try:
-        return _load_yaml_internal_with_type(ESPHomeLoader, fname, content)
-    except EsphomeError:
-        # Loading failed, so we now load with the Python loader which has more
-        # readable exceptions
-        return _load_yaml_internal_with_type(ESPHomePurePythonLoader, fname, content)
+        with open(fname, encoding="utf-8") as f_handle:
+            try:
+                return _load_yaml_internal_with_type(ESPHomeLoader, fname, f_handle)
+            except EsphomeError:
+                # Loading failed, so we now load with the Python loader which has more
+                # readable exceptions
+                # Rewind the stream so we can try again
+                f_handle.seek(0, 0)
+                return _load_yaml_internal_with_type(
+                    ESPHomePurePythonLoader, fname, f_handle
+                )
+    except (UnicodeDecodeError, OSError) as err:
+        raise EsphomeError(f"Error reading file {fname}: {err}") from err
 
 
 def _load_yaml_internal_with_type(
     loader_type: type[ESPHomeLoader] | type[ESPHomePurePythonLoader],
     fname: str,
-    content: str,
+    content: TextIOWrapper,
 ) -> Any:
     """Load a YAML file."""
     loader = loader_type(content)
diff --git a/tests/unit_tests/fixtures/yaml_util/missing_comp.yaml b/tests/unit_tests/fixtures/yaml_util/missing_comp.yaml
new file mode 100644
index 0000000000..d065901ed9
--- /dev/null
+++ b/tests/unit_tests/fixtures/yaml_util/missing_comp.yaml
@@ -0,0 +1,12 @@
+esphome:
+  name: test
+
+esp32:
+  board: esp32dev
+
+wifi:
+  ap: ~
+
+image:
+  - id: its_a_bug
+    file: "mdi:bug"
diff --git a/tests/unit_tests/test_yaml_util.py b/tests/unit_tests/test_yaml_util.py
index 78b6a2ad84..9178726247 100644
--- a/tests/unit_tests/test_yaml_util.py
+++ b/tests/unit_tests/test_yaml_util.py
@@ -22,3 +22,23 @@ def test_loading_a_broken_yaml_file(fixture_path):
         yaml_util.load_yaml(yaml_file)
     except EsphomeError as err:
         assert "broken_included.yaml" in str(err)
+
+
+def test_loading_a_yaml_file_with_a_missing_component(fixture_path):
+    """Ensure we show the filename for a yaml file with a missing component."""
+    yaml_file = fixture_path / "yaml_util" / "missing_comp.yaml"
+
+    try:
+        yaml_util.load_yaml(yaml_file)
+    except EsphomeError as err:
+        assert "missing_comp.yaml" in str(err)
+
+
+def test_loading_a_missing_file(fixture_path):
+    """We throw EsphomeError when loading a missing file."""
+    yaml_file = fixture_path / "yaml_util" / "missing.yaml"
+
+    try:
+        yaml_util.load_yaml(yaml_file)
+    except EsphomeError as err:
+        assert "missing.yaml" in str(err)