The next iPhone is rumored to have a home button integrated in the display. The iPhone 7 is ahead of the curve.
I was hesitant about the removal of the mechanical home button on the iPhone 7, but I love the haptic engine driven button. Pressing the home button on the iPhone 7 actually feels "more real" than on the previous iPhones. The end goal for the iPhone home button is to disappear completely. There is a long standing rumor that the home button would become invisible and be part of the screen.
The technology for in-display fingerprint scanner is already available from LG. There is already an onscreen home button existing in the iPhone 7. It shows up when there is an issue with the Taptic engine. Apple has put code in place that gives users a home button on the display in case the physical home button stopped working.
A similar on display home button is available through the AssistiveTouch feature. The feature gives you an on screen option to open a popup containing the home button among access to other features.
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A photo of that rare incident have been posted on MacRumor's forum here. While this onscreen Home Button is just a work around, the real implementation is supposed to come in 2017 with the introduction of the first OLED iPhone. The 10th anniversary iPhone is supposed to have a edge-to-edge screen without any bezels on top and bottom.