Should I pay points on a VA loan?
It depends on the price the lender offers and how long you expect to keep the mortgage. A point equals 1% of the loan amount, but how much a point lowers the rate varies by lender and by day. Compare the upfront cost with the monthly savings and the date you might sell or refinance.
Educational answer from Mortgage Expert. Mortgage Expert's licensed loan originator is Shahram Sondi, Florida mortgage broker, Certified Mortgage Advisor™, NMLS 186790. Sources checked .
How it works
Points are a lender pricing choice, not a VA rule
VA says the lender, not VA, sets the interest rate, discount points and closing costs. Discount points are fees you can pay at closing to get a lower rate. VA does not require them.
That is why a bank, credit union, direct lender or broker may quote a VA loan with points. It is a pricing option. No type of lender is always cheaper. Ask each one for the same set of options and compare them.
Three options to ask for
Ask each lender, on the same day, for three versions of the same loan: one with points, one near zero points, and one with a lender credit if available. A lender credit is the reverse of points. You take a higher rate and the lender pays some of your closing costs.
The CFPB suggests asking every lender for the same amount of points or credits so the quotes line up.
VA rules that change the math
On a VA purchase, only the funding fee can be added to the loan. Points must be paid at closing, by you or by someone else allowed to pay them.
The seller can pay your points. VA lists loan discount points among the costs a buyer and seller can negotiate, and VA's Lender's Handbook says the seller, the lender or another party may pay them for you.
VA limits seller concessions to 4% of the home's reasonable value, shown on the VA Notice of Value. Points that are normal for the market do not count toward that 4%. Extra points the seller pays to buy the rate down further than the market norm do count as a concession. Your lender decides which points are normal and confirms how each seller-paid charge is treated.
The funding fee is separate. Unless you are exempt, it is a percentage of the loan, so it does not change with the points you choose.
Break-even on a $350,000 VA loan
Illustrative example. This is not a real borrower, offer or quote. The monthly difference and credit size are assumptions, not real pricing.
A buyer has a $350,000 VA loan amount. The lender offers three same-day options. Assume the one-point option lowers the monthly payment by $35 compared with the zero-point option. The credit option gives a credit of 0.5% of the loan.
| Option | Upfront effect |
|---|---|
| One point | $3,500 paid at closing |
| Near zero points | $0 |
| Lender credit (0.5%) | $1,750 credit toward closing costs |
The math, step by step
- One point: $350,000 × 1% = $3,500.
- Lender credit: $350,000 × 0.5% = $1,750.
- Break-even on the point: $3,500 ÷ $35 = 100 months.
- In years: 100 ÷ 12 = about 8.3 years.
Takeaway: The point pays off only if the buyer keeps this loan about 8.3 years or longer. If a move or refinance is likely sooner, the zero-point or credit option may cost less overall.
Easy things to get wrong
- Do not assume one point always buys a set rate cut. Ask what each point actually buys on the day you lock.
- Points on a VA purchase are paid in cash at closing. Make sure you still have enough savings left after closing.
- Seller-paid points above what the market normally charges count toward VA's 4% concession limit. Ask the lender how the seller-paid points on your quote will be counted.
- If rates fall and you refinance, the money spent on points does not come back.
What to do next
Run your own break-even with the point cost and monthly savings from two same-day VA quotes.
Got a VA quote with points and not sure it is worth it? Shahram Sondi can provide written quotes with points, with no points and with a lender credit so you can compare them side by side. Pricing depends on your file and the market on the day of the quote.
Check the sources
- VA.gov: VA funding fee and closing costs (discount points, financing on a purchase)
- VA Pamphlet 26-7, Chapter 8, Topics 4, 5 and 7: who may pay points, seller concessions and the 4% limit, what can be financed (article modified 2026-07-09)
- VA: loan fees (the lender, not VA, sets the rate, points and closing costs; updated May 26, 2025)
- CFPB: discount points and lender credits
Sources checked . Program guidance and lender requirements can change.
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Educational only. VA guidelines, lender overlays, rates, fees, and underwriting requirements can change. Final eligibility depends on full underwriting review. Mortgage Expert, Inc. is not affiliated with the VA, HUD, or any government agency.
