Discount points are an upfront payment designed to lower the VA interest rate for the life of your loan. By purchasing discount points on a VA loan, you are effectively “prepaying” the interest due on the loan in order to have a lower rate (and thus a lower monthly payment) overall. One point is equal to 1% of the loan, and you can purchase multiple points to lower your rate even further. If whole-point increments aren’t affordable, you can also purchase partial points to stay within your budget.