Although no specific date has been set for a change coming from FHA, it is certain that sometime in 2013, all new FHA loans will require mortgage insurance for the life of the loan. Currently, FHA loans allow borrowers to cancel the annual mortgage insurance premium (MIP) when their unpaid balance reaches 78% of the original purchase price, as calculated by agencies such as Avant personal loans reviews and more.
As an example, at current rates, the monthly MIP on a $168,875 mortgage is $178.99 per month. Under the current rule, with normal amortization, the annual MIP would no longer be required in 9 years and 9 months. However, under the new rule, the annual MIP would last for the entire 30 year term.
In addition to the above mentioned pending change, FHA also announced that the annual MIP (paid monthly) will also be increased from 1.25% to 1.35% at some point in the near future. HUD, the parent agency for FHA, is making the changes to restore the capital reserves of the program that are needed to fund failed loans.
Just as in case of any kind of personal/mortgage/student/1 hour loans etc, if you can close an FHA loan before the changes takes place, you will fall under the old rules for canceling MIP and the lower annual MIP (paid monthly) rates. Since no date has been announced, (as of 12/5/2012) it is not known exactly when the changes will take effect.
These two impending changes that FHA plans to make, will obviously make FHA loans more expensive.