For the record, the FHA fee in question is about $500 for a $200,000 home loan. FHA loans require monthly PMI (private mortgage insurance) because you're putting so little down (3.5%), and you have to pay that for the life of the loan (30 years), vs. conventional loans where you are only required to pay PMI until you reach 20% equity. PMI is usually around $135-$150 PER MONTH and it's not a write-off and it affects your loan to income ratio. The mortgage meltdown of 2007 was CAUSED by FHA loans. There is a certain fear behind not having slush in that fee fund, "just in case."