Yes, USDA loans allow points. The guarantee fee is a separate cost. With zero down payment, the loan-to-value ratio is higher, which means rate reductions from points have a bigger impact on your monthly payment.
USDA loans offer 100% financing, so every basis point saved through points has a larger dollar impact than on a conventional loan with a down payment. Patrick Kevin Fagan helps buyers in eligible rural areas of San Antonio and the Texas Hill Country evaluate USDA loan points.
USDA Loan Points
USDA loans allow discount points just like other government loan programs. One point costs 1% of the loan amount and reduces your rate by approximately 0.25%. Because USDA loans have zero down payment, the loan amount is higher relative to the home value, making each point purchase have a larger absolute monthly savings. Patrick Kevin Fagan explains USDA points for eligible buyers in Bexar County and surrounding areas.
USDA Guarantee Fee
The USDA guarantee fee has two parts: an upfront fee (typically 1% of the loan amount) and an annual fee (0.35% of the average loan balance). These fees are separate from any points you buy. The guarantee fee funds the USDA loan program and is not negotiable like points are. Patrick Kevin Fagan can show you how the guarantee fee affects your overall cost comparison.
LTV Impact on Points
With 100% financing on USDA loans, your loan-to-value ratio is at maximum. This means rate reductions from points apply to the full loan amount, giving you larger absolute monthly savings compared to a conventional loan with 20% down. The break-even math still works the same way: divide point cost by monthly savings. Call 210-317-6514 to run the numbers.
