Section 8 Fair Market Rent (FMR) for ZIP 06516 - 2027

Investment Score for ZIP 06516

Based on 1% Rule: A+ (≥1.5%) | A (≥1.2%) | B (≥1.0%) | C (≥0.8%) | D (≥0.6%) | F (<0.6%)

FY 2027 Fair Market Rent Rates

Unit Size	Monthly FMR
Studio	$1,530
1 Bedroom	$1,660
2 Bedrooms	$1,990
3 Bedrooms	$2,480
4 Bedrooms	$2,790
5 Bedrooms	$3,236
6 Bedrooms	$3,624
7 Bedrooms	$3,914
8 Bedrooms	$4,110

Investment Analysis by Bedroom Size

Zillow median home prices vs Section 8 FMR rates (Data: 2026-08-31)

Bedrooms	Monthly FMR	Median Price	1% Rule	Grade
1BR	$1,660	$168,500	0.99%	C
2BR	$1,990	$302,962	0.66%	D
3BR	$2,480	$387,560	0.64%	D
4BR	$2,790	$423,578	0.66%	D
5BR	$3,236	$465,300	0.7%	D

Demographics & Housing Statistics

U.S. Census Bureau data (2024)

### Market Analysis for ZIP Code 06516 (West Haven, CT) #### Section 8 Voucher Dynamics The Fair Market Rent (FMR) figures for ZIP code 06516, set by HUD for 2026, indicate that the maximum allowable rent for a two-bedroom apartment is $1930. This figure represents 31.1% of the median household income of $74,382, which suggests that it is a reasonable benchmark for affordability in the area. However, comparing this to actual rental prices reveals significant discrepancies. The Zillow median price for a two-bedroom home in West Haven is $293,946, which translates into a monthly mortgage payment well above the FMR. Given the price-to-FMR ratio of 12.7x, landlords would likely find it challenging to charge rents at or below the FMR while also covering their mortgage payments and maintaining profitability. Consequently, voucher holders face strict constraints, as they can only afford units priced at or below $1930 per month for a two-bedroom unit, which is significantly lower than the market average. #### Affordability & Renter Profile With nearly half of the population (49.4%) being renters, West Haven has a substantial demand for rental housing. The occupancy rate of 95.3% indicates that the rental market is quite tight, with very few vacant units available. This high occupancy rate suggests that there is little room for new entrants into the rental market, making it difficult for potential tenants to find affordable housing options. Given the median household income of $74,382, many residents might struggle to afford market-rate rentals, especially for larger units like three-bedroom ($2380) and four-bedroom ($2820) apartments. These higher rent levels represent a significant portion of the median income, making it particularly challenging for low-income families to secure suitable housing without assistance. #### Investor Angle From an investor perspective, the FMR levels provide a clear guideline for pricing properties to attract Section 8 voucher holders. However, the reality of the market means that achieving cash flow positivity at these rates is unlikely. For instance, a two-bedroom apartment priced at $1930 would need to cover both the mortgage payment and other expenses such as maintenance, property taxes, and insurance. Given the Zillow median price of $293,946, the monthly mortgage payment alone would be approximately $1,500 based on a 4.5% interest rate and a 30-year fixed mortgage. Adding typical operating costs, an investor would need to charge around $2,000 to $2,500 per month just to break even, which far exceeds the FMR limit. The investment grade for this ZIP code is relatively low due to the tight rental market and the difficulty in finding properties that can be rented at or below the FMR. Investors who are considering purchasing properties to cater to Section 8 voucher holders should be prepared for limited profit margins and potentially longer vacancy periods if they cannot meet the market rate. #### Specific Actionable Insights 1. **Focus on Smaller Units**: Given the high price-to-FMR ratio, investors should focus on acquiring smaller units, such as one-bedroom apartments, where the FMR is $1560. This allows for a better chance of covering mortgage and operating costs while still remaining within the voucher limits. Additionally, smaller units tend to have higher demand and faster turnover rates. 2. **Consider Renovation Projects**: Investors could look into properties that require renovation. By investing in upgrades and repairs, they can potentially increase the value and appeal of the property, making it more attractive to voucher holders and other tenants. This strategy can help offset some of the financial constraints imposed by the FMR. 3. **Explore Alternative Financing Options**: Given the tight margins, traditional financing might not be sufficient. Investors should explore alternative financing methods, such as government-backed loans or grants designed to support affordable housing initiatives. These programs can reduce the overall cost burden and improve the feasibility of renting at or below the FMR. #### Bottom Line Based on the analysis, the recommendation for Section 8-focused investors in ZIP code 06516 is to **Skip** this market. The high price-to-FMR ratio and the tight rental market make it difficult to achieve positive cash flow while adhering to the FMR guidelines. Additionally, the limited supply of affordable units and the high demand for them suggest that finding properties that fit within the FMR range will be challenging. While there are actionable insights that can mitigate some of these issues, the overall environment is not conducive to profitable investments for those primarily targeting Section 8 voucher holders.

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.