Location: Bergen-Passaic, NJ | Metro: Bergen-Passaic, NJ 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 | $1,490 |
| 1 Bedroom | $1,670 |
| 2 Bedrooms | $1,920 |
| 3 Bedrooms | $2,330 |
| 4 Bedrooms | $2,940 |
| 5 Bedrooms | $3,410 |
| 6 Bedrooms | $3,819 |
| 7 Bedrooms | $4,125 |
| 8 Bedrooms | $4,331 |
Zillow median home prices vs Section 8 FMR rates (Data: 2026-08-31)
| Bedrooms | Monthly FMR | Median Price | 1% Rule | Grade |
|---|---|---|---|---|
| 2BR | $1,920 | $368,869 | 0.52% | F |
| 3BR | $2,330 | $550,872 | 0.42% | F |
| 4BR | $2,940 | $632,459 | 0.46% | F |
| 5BR | $3,410 | $780,387 | 0.44% | F |
U.S. Census Bureau data (2024)
Passaic, ZIP code 07055, is a densely populated urban hub located along the banks of the Passaic River, roughly ten miles north of Newark. This city is characterized by its high-density development and strategic position within the Bergen-Passaic metro area, offering residents an ease of commute to New York City. The local economy is supported by significant healthcare and educational institutions, including St. Mary's General Hospital, which serves as a major employer and stabilizing force for the community. The neighborhood's layout provides immediate access to major transit routes, reinforcing its appeal to working-class renters who need efficient connections to broader regional employment centers.
Financially, the numbers reveal a complex landscape. The FY2026 Fair Market Rent (FMR) for a 2-bedroom unit is set at $1,890, yet current market rent (Zillow ZORI) sits at $2,271, resulting in a $381 gap between what the voucher covers and prevailing market rates. Median home values are high at $553,173, while the median 2BR sales price is $366,344. With properties sitting on the market for a median of 85 days, the entry price is elevated relative to the rental income caps, presenting a hurdle for immediate positive cash flow under strict FMR limits without substantial down payments.
The tenant pool is substantial, driven by a 76.2% renter share and a median household income of $55,371. This income level creates a strong structural demand for housing subsidies, as local wages often lag behind rental costs. While specific school ratings vary, the city's transit links and proximity to major economic hubs sustain steady demand. However, the high renter concentration also implies a competitive environment where maintaining occupancy requires attention to property condition and pricing relative to the $1,650 1BR and $2,310 3BR FMR benchmarks.
The Section 8 verdict leans toward stability over aggressive cash flow. The primary investor angle here is the preservation of asset value in a market with high demand and limited housing supply. Given the $381 shortfall between FMR and market rent for 2BR units, reliance solely on voucher payments may not cover full operating costs at current market rates. Investors should view this as a long-term hold strategy where the high occupancy potential and property appreciation offset the tighter rental margins imposed by HUD limits.
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.