FHA Loans Insured but Costly

``As of April 2010, the upfront mortgage insurance premium for an FHA-insured loan increased from 1.75 percent of the total loan amount to 2.25 percent. This translates into a $500 increase for every $100,000 borrowed. However, this is just the beginning. David Stevens, the FHA Commissioner, announced that on September 7, FHA will drop the upfront mortgage insurance premium to 1 percent of the total loan amount, but nearly triple the annual mortgage premium from 0.55 percent to 1.50 percent. Stevens said that the premium would increase gradually, first to 0.85 percent then to 0.9 percent, etc. Although, this recent development will soften the upfront blow to borrowers, the mortgage would be more expensive over the life of the loan.''