Final answer:
Discount points on FHA and VA loans are usually paid by the borrower. These are prepaid interest to lower the loan's interest rate and are typically part of the mortgage closing costs.
Step-by-step explanation:
Discount points on FHA (Federal Housing Administration) and VA (Veterans Affairs) loans are generally paid by the borrower. Discount points are a form of prepaid interest where the borrower can pay upfront to lower the interest rate on the loan. This is often part of the closing costs in a mortgage transaction. While the borrower is usually responsible for this payment, in some cases the seller may agree to pay a portion or all of the discount points as part of the negotiation on the sale of the home; however, this is not the standard practice.
Regarding FHA and VA loans, these government-backed programs were designed to make homeownership more accessible. The FHA was created in 1934 to stimulate the housing market by making loans accessible and affordable, while VA loans are part of the G.I Bill, helping veterans in homeownership.