I was assuming you are talking about an FHA loan you used to purchase the home, not refinanced into.  If you were talking about an FHA loan you used to purchase a home with, then if you bought it for $100k it doesn't matter if it's worth $200k - the lower of the two is used.  So if you purchased a home for $100k but it was really worth $200k, HUD still bases everything off of the lower of the two, or the $100k purchase price.  If you are talking about removing MI from an FHA loan that you refinanced into, then it is based off of the appraised value.