Every VA rate quote is really a menu: a rate with no points, a lower rate if you pay points, sometimes a higher rate that comes with a credit. VA's regulation says when a Veteran may pay points and whether they can be financed. The rest is arithmetic.
For a loan at a rate agreed upon by the Veteran and the lender, 38 CFR 36.4312(b) says the Veteran may pay reasonable discount points. It adds two limits:
Discount points may not be included in the loan amount, so on a purchase or cash-out refinance they are paid in cash or by someone else.
On an interest rate reduction refinance, discount points may be included in the loan.
Points are separate from the lender's origination charge, which VA caps at a 1 percent flat charge; see VA closing costs and fees.
A point is 1 percent of the loan amount. The question is how long it takes the lower payment to repay it.
On a $350,000 loan, 1 point is $3,500.
Compare the monthly principal and interest with and without the point. Suppose it is $60 a month lower.
$3,500 divided by $60 is about 58 months. If you expect to keep the loan well beyond that, the point can pay off. If you might sell or refinance sooner, it usually will not.
Because you can prepay a VA loan at any time without penalty and refinance later with an IRRRL, paying heavily to buy down a rate you may replace is often the weaker move. The live table on the VA rates page shows the points and no-points options side by side for your scenario. The rest of the rate rules are on how VA rates are set.
Rule text: 38 CFR 36.4312(b), Interest rates, and 36.4313(d)(2), Charges and fees. Rates shown on this site are indicative, not a commitment to lend.
Rates change with every lender rate sheet. A short call turns the option you picked into a real Loan Estimate on your own file.