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FHA loans are a very popular loan option for many 1st time home buyers, because it allows for a low fixed interest rate loan, and only a 3.50% down payment from the perspective buyer.  However, because the lender is taking on a "high risk" loan due to the low investment from the buyer, mortgage insurance is required to help protect their interest. 

Although many people use the term "FHA loan", in actuality, FHA only provide "affordable" mortgage insurance on loans that may otherwise never be approved for purchase by an investor.  FHA will provide mortgage insurance, at the expense of the buyer, upon close of escrow.  Currently, FHA requires a 1.0% "up front" mortgage insurance fee (which is typically added to the base loan amount, then financed).  However, they also require that the home buyer pay a "monthly" mortgage insurance premium calulated at 0.90% of the loan amount.  Due to several defaults over recent years, FHA has announced that the monthly mortgage insurance premium will increase to 1.15% on all FHA case #'s issued on or after April 18, 2011.

If you are considering purchasing or refinancing a home utilizing an FHA insured mortgage, you will want to be aware of this date.