Section 8 Fair Market Rent (FMR) for ZIP 07104 - 2027

Investment Score for ZIP 07104

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	$1,460
1 Bedroom	$1,640
2 Bedrooms	$1,990
3 Bedrooms	$2,490
4 Bedrooms	$2,830
5 Bedrooms	$3,283
6 Bedrooms	$3,677
7 Bedrooms	$3,971
8 Bedrooms	$4,170

Investment Analysis by Bedroom Size

Zillow median home prices vs Section 8 FMR rates (Data: 2026-07-31)

Bedrooms	Monthly FMR	Median Price	1% Rule	Grade
2BR	$1,990	$345,722	0.58%	F
3BR	$2,490	$458,460	0.54%	F
4BR	$2,830	$542,388	0.52%	F

Demographics & Housing Statistics

U.S. Census Bureau data (2024)

### Market Analysis for ZIP Code 07104 (Newark, NJ) #### Section 8 Voucher Dynamics The Fair Market Rent (FMR) for ZIP code 07104 in Newark, NJ, is set by HUD for 2026 as follows: - 0BR: $1400 - 1BR: $1600 - 2BR: $1930 (which is 42.9% of the median household income) - 3BR: $2430 - 4BR: $2760 These figures represent the maximum rent that a Section 8 voucher holder can pay based on the size of the unit. However, the actual rents in the area can be significantly higher. For instance, the Zillow median price for a 2BR unit is $337,248, which translates to a monthly rental cost of approximately $1,405 based on typical mortgage payments. This implies that the actual rental costs are likely higher than the FMRs, especially considering the high occupancy rate of 94.8%. Voucher holders face significant constraints due to the disparity between the FMR and actual rents. The FMR for a 2BR unit is $1930, but if the average rental cost is closer to $1,405 per month, it suggests that the actual rents could be much higher, making it difficult for voucher holders to find suitable housing within their budget. Additionally, landlords may be hesitant to accept vouchers due to the lower rent compared to market rates, leading to a limited pool of available units for voucher holders. #### Affordability & Renter Profile ZIP code 07104 has a population of 52,266, with 71.6% of residents being renters. This indicates a strong demand for rental properties, which is further supported by the high occupancy rate of 94.8%. Given that the median household income is $53,978, the affordability of housing is a critical issue. The FMR for a 2BR unit is $1930, which represents 42.9% of the median income. This suggests that the majority of residents who rely on their own income to cover rent would struggle to afford a 2BR unit without financial assistance. The tight market conditions mean that there is little room for rent discounts, and competition among potential tenants is fierce. This scenario is particularly challenging for low-income families who might need to rely on Section 8 vouchers to secure housing. The high percentage of renters and the limited supply of affordable units indicate that the market is undersupplied, creating a situation where landlords have considerable leverage over rental pricing. #### Investor Angle From an investor’s perspective, the ZIP code 07104 presents both opportunities and challenges. The Fair Market Rent (FMR) for a 2BR unit is $1930, which is significantly lower than the median home value of $337,248, translating to a price-to-FMR ratio of 14.6x. This ratio suggests that the cost of purchasing a property is much higher than the rent it could generate under the FMR guidelines. To determine if this ZIP code is cash-flow positive at FMR, we need to consider the typical rental yields. Assuming a conservative annual rental yield of 5%, the monthly rental income from a property valued at $337,248 would be approximately $1,405. This is well below the FMR for a 2BR unit, indicating that an investor would likely incur a loss if they relied solely on FMR-based rents. The investment grade for this ZIP code is relatively low due to the high purchase costs and the limited ability to command higher rents from voucher holders. Investors should be cautious about the long-term viability of such investments, as they may struggle to achieve positive cash flow or reasonable returns. #### Specific Actionable Insights 1. **Focus on Smaller Units**: Given the high price-to-FMR ratio, investors should focus on smaller units, such as 0BR or 1BR apartments, which have FMRs of $1400 and $1600 respectively. These units are more likely to be rented out at or near the FMR, providing a better chance of achieving positive cash flow. 2. **Consider Non-Section 8 Tenants**: Due to the limited financial flexibility of Section 8 voucher holders, investors might want to explore other tenant profiles. For example, targeting students or young professionals who may be willing to pay higher rents could improve profitability. 3. **Seek Government Subsidies**: Investors should look into government subsidies and programs designed to support affordable housing initiatives. These programs can help offset the financial burden of renting at FMR levels and provide additional incentives for maintaining properties. #### Bottom Line For Section 8-focused investors, the ZIP code 07104 is generally not recommended for new purchases. The high price-to-FMR ratio and the tight market conditions make it difficult to achieve positive cash flow. Existing investors who already own properties in this area may choose to hold onto them, but they should carefully manage their expenses and consider diversifying their tenant base to include non-voucher holders. New investors looking to enter the market should seek areas with a more favorable price-to-FMR ratio and less competitive market conditions.

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.