Location: Boston-Cambridge-Quincy, MA | Metro: Boston-Cambridge-Quincy, MA-NH HUD Metro FMR Area
Based on 1% Rule: A+ (≥1.5%) | A (≥1.2%) | B (≥1.0%) | C (≥0.8%) | D (≥0.6%) | F (<0.6%)
| Unit Size | Monthly FMR |
|---|---|
| Studio | $3,130 |
| 1 Bedroom | $3,230 |
| 2 Bedrooms | $3,860 |
| 3 Bedrooms | $4,600 |
| 4 Bedrooms | $5,070 |
| 5 Bedrooms | $5,881 |
| 6 Bedrooms | $6,587 |
| 7 Bedrooms | $7,114 |
| 8 Bedrooms | $7,470 |
Zillow median home prices vs Section 8 FMR rates (Data: 2026-08-31)
| Bedrooms | Monthly FMR | Median Price | 1% Rule | Grade |
|---|---|---|---|---|
| 1BR | $3,230 | $452,884 | 0.71% | D |
| 2BR | $3,860 | $768,626 | 0.5% | F |
| 3BR | $4,600 | $1,232,637 | 0.37% | F |
| 4BR | $5,070 | $1,717,026 | 0.3% | F |
| 5BR | $5,881 | $2,464,933 | 0.24% | F |
U.S. Census Bureau data (2024)
The analysis of the Section 8 program in ZIP code 02420, specifically in Lexington, MA, reveals a significant gap between the Fair Market Rent (FMR) and the actual market rent. For fiscal year 2024, the FMR is set at $3620, while the Census ACS reports an average market rent of $2801. This results in a gap of $819, or approximately 29%, where the FMR exceeds the market rent.
This discrepancy makes Lexington an attractive location for landlords and small-portfolio investors seeking to maximize yields. The higher FMR allows landlords to receive a government subsidy that covers the difference between the actual market rent and the FMR, effectively ensuring a rental rate above the local market average. Given that only 14.0% of residents are renters, there is a relatively low competition for rental properties, which further supports the ability to command higher rents through the Section 8 program.
In Lexington, the median home value is $1,532,298, and the median household income is $245,031. These figures indicate a strong economic environment where homeownership is prevalent and incomes are high. However, the rental market remains a niche but important segment, particularly for those who qualify for housing assistance. Landlords can leverage the Section 8 program to secure stable rental income that surpasses the local market rate, making it a strategic investment opportunity.
Despite the benefits, it's crucial to understand the implications of accepting housing voucher tenants. While the FMR provides a guaranteed income level, the administrative overhead and compliance requirements associated with the Section 8 program must be considered. Additionally, the potential for longer vacancy periods due to the limited pool of eligible tenants should be factored into the investment strategy.
In summary, the gap between the FMR and market rent in Lexington, MA, positions the area as a favorable yield play for landlords and investors willing to participate in the Section 8 program. The economic context of the town supports this conclusion, although careful consideration of the associated costs and challenges is necessary for a successful investment.
Data Sources: FMR data from HUD (2027). Median home prices from Zillow (2026-08-31). Demographics from U.S. Census (2024).
About FMR: Fair Market Rent (FMR) is used to determine payment standards for the Section 8 Housing Choice Voucher program, initial renewal rents for some expiring project-based Section 8 contracts, and rent ceilings for HOME Investment Partnerships.