Yes and no. FHA requires that you have MI until you reach 78% loan to value or you've paid it for 5 years, whichever is longer so you would have the MI for at least 5 years.
Another option would be to refinance out of the FHA mortgage and into a conventional loan when you're ready to apply the rest of the 20% down payment.
You maybe able to buy with a conventional loan and 5% down which would allow you to pay down the balance later and drop the mortgage insurance as long as the appraised value supports it.
Please feel free to contact me for more info or help.
Senior Mortgage Banker
Another option is going with a single premium MI, consider if the numbers but with an A to B Plus borrower it will usually pencil out.
However your talk of "walking" is concerning. One of the best reasons to buy in this market is the affordability factor. It is cheaper to buy than rent in most areas here in Portland. If you are able to keep making timely payments and maintain if not make improvements to your home your still ahead of the game as a homeowner. Consider not only the reduction in your tax burden but your real estate holdings in the long run. I agree that the thought of being underwater is disheartening however it only counts if you have to sell. I would never encourage anyone to "walk" when there are better options. Better not only for your credit but on our road to recovery in the housing market.
And how do you put a price on enjoyment and security?