Location: Newark, NJ | Metro: Middlesex-Somerset-Hunterdon, 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 | $1,800 |
| 1 Bedroom | $2,040 |
| 2 Bedrooms | $2,460 |
| 3 Bedrooms | $3,070 |
| 4 Bedrooms | $3,510 |
| 5 Bedrooms | $4,072 |
| 6 Bedrooms | $4,561 |
| 7 Bedrooms | $4,926 |
| 8 Bedrooms | $5,172 |
Zillow median home prices vs Section 8 FMR rates (Data: 2026-07-31)
| Bedrooms | Monthly FMR | Median Price | 1% Rule | Grade |
|---|---|---|---|---|
| 2BR | $2,460 | $439,568 | 0.56% | F |
| 3BR | $3,070 | $546,294 | 0.56% | F |
| 4BR | $3,510 | $604,642 | 0.58% | F |
| 5BR | $4,072 | $668,980 | 0.61% | D |
U.S. Census Bureau data (2024)
The economics of Section 8 housing in ZIP code 07065, Rahway, NJ, involve understanding the SAFMR (Small Area Fair Market Rent) and comparing it to the local market rent. For a two-bedroom apartment in this ZIP code, the SAFMR for FY 2024 is set at $1970. This means that the maximum amount a landlord can receive from the government via a Section 8 voucher for a two-bedroom unit in this specific ZIP code is $1970 per month.
The local market rent, as measured by ZORI (Zillow Observed Rent Index), is higher at $2,512. This indicates that the average rental price for a similar two-bedroom apartment in Rahway exceeds the SAFMR by about $542.
To understand what a voucher actually pays, you need to consider the tenant's portion and any utility allowances. Typically, the tenant is required to pay 30% of their adjusted income towards rent. If we assume an average adjusted income for a tenant eligible for Section 8 assistance is $15,000 annually, then their monthly contribution would be around $375. This figure can vary depending on the individual tenant's income level.
The total reimbursement to the landlord under a Section 8 voucher program would be the sum of the tenant's portion and the government subsidy, up to the SAFMR limit. In this case, the landlord would receive the $375 from the tenant plus the remaining amount up to $1970 from the government. Therefore, if the tenant contributes $375, the government would cover the rest, which is $1595.
Utility allowances are additional payments made to help cover the cost of utilities. These allowances are not included in the SAFMR but are calculated separately based on the utility costs in the area. Utility allowances can range widely, but for the sake of this analysis, let's assume a conservative estimate of $200 per month for utilities.
Combining the government subsidy, the tenant's contribution, and the utility allowance, the landlord would receive a total of $2095 per month. This is less than the local market rent of $2,512, creating a reimbursement gap of $417 per month for a two-bedroom apartment.
In summary, while the SAFMR for a two-bedroom apartment in Rahway, NJ (ZIP 07065) is $1970, landlords will typically receive a lower total reimbursement of $2095 when factoring in the tenant's portion and utility allowances. This leaves a significant gap between the SAFMR reimbursement and the local market rent, resulting in a surplus for the market rent over the voucher reimbursement of $417 per month.
Data Sources: FMR data from HUD (2027). Median home prices from Zillow (2026-07-31). 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.