If your current mortgage was endorsed by the FHA before June 1, 2009, the upfront premium is 0.01 percent of the loan amount, says Parsons. "It is a cost, but not usually an out-of-pocket cost, since it is almost always added to the loan balance," he says.In addition to the upfront premium, these loans also require an annual premium -- paid monthly -- of 0.55 percent of the base loan amount. FHA mortgages endorsed after June 1, 2009 have a much higher upfront premium of 1.75 percent. The annual premium varies by loan term and loan-to-value (LTV) ratio. It ranges from 1.25 percent (30-year term, LTV over 95 percent) to as low as 0.35 percent (15-year term, LTV under 90 percent). Currently, the annual premium must be in place for at least five years, and after that time, it can be cancelled whenever the loan balance has been paid down to 78 percent, Parsons says.