Section 8 Fair Market Rent (FMR) for ZIP 07105 - 2027

Investment Score for ZIP 07105

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	$1,480
1 Bedroom	$1,670
2 Bedrooms	$2,020
3 Bedrooms	$2,520
4 Bedrooms	$2,880
5 Bedrooms	$3,341
6 Bedrooms	$3,742
7 Bedrooms	$4,041
8 Bedrooms	$4,243

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	$2,020	$385,141	0.52%	F
3BR	$2,520	$473,280	0.53%	F

Demographics & Housing Statistics

U.S. Census Bureau data (2024)

### Market Analysis for ZIP Code 07105 (Newark, NJ) #### Section 8 Voucher Dynamics The Fair Market Rent (FMR) for ZIP code 07105 is set by HUD for 2026, and it ranges from $1430 for a zero-bedroom unit to $2770 for a four-bedroom unit. However, the actual rental market in Newark, as indicated by Zillow's median price for a two-bedroom unit, is significantly higher at $389,327. This translates into a price-to-FMR ratio of 16.6x, meaning that the median home value is 16.6 times the FMR for a two-bedroom unit. For voucher holders, this implies that the FMR is far below the actual market rent, creating significant constraints. A voucher holder would struggle to find a two-bedroom unit within their budget, as the FMR of $1950 is only about half of the median rental price. #### Affordability & Renter Profile ZIP 07105 has a population of 57,093, with 84.1% being renters. The median household income is $59,847, which means that 39.1% of the median income goes towards the rent of a two-bedroom unit at FMR. Given the high renter percentage and the fact that 2BR units at FMR consume nearly 40% of the median income, it is clear that the market is tight and highly competitive for low-income renters. The occupancy rate of 92.6% further supports the notion that there is little excess supply, making it a challenging environment for those seeking affordable housing. #### Investor Angle From an investor perspective, the ZIP code 07105 presents a mixed picture when considering cash flow at FMR. While the FMRs are lower than market rates, they still represent a significant portion of the median income. For instance, the FMR for a two-bedroom unit is $1950, which is 39.1% of the median household income. This suggests that while there is demand, the returns at FMR levels will be modest compared to market rates. The investment grade in this area would likely be rated as moderate due to the high renter percentage and relatively strong occupancy rates, but also because of the limited affordability for many residents. #### Specific Actionable Insights 1. **Focus on Smaller Units**: Given the high price-to-FMR ratio, investors should consider focusing on smaller units such as one-bedroom apartments. The FMR for a 1BR unit is $1610, which is more aligned with the median income and less likely to exceed the maximum allowable rent for voucher holders. This could provide a better chance of securing tenants through the Section 8 program. 2. **Consider Location-Specific Strategies**: Within ZIP 07105, certain neighborhoods might have more favorable conditions for Section 8 tenants. Investors should conduct detailed neighborhood analyses to identify areas where rents are closer to FMR levels and where there is a higher concentration of low-income households. This can help in maximizing the chances of finding suitable tenants. 3. **Explore Mixed-Income Developments**: To balance the risk and reward, investors might want to explore mixed-income developments. By offering a mix of units at FMR and market rates, developers can cater to both voucher holders and other renters, potentially stabilizing cash flows and reducing vacancy risks. #### Bottom Line For Section 8-focused investors, the ZIP code 07105 presents a challenging yet potentially rewarding market. The high renter percentage and strong occupancy rates indicate a robust demand for rental properties, but the significant gap between FMR and market rates makes it difficult to attract voucher holders to larger units. Therefore, the recommendation is to **Hold** on existing investments in this area, particularly if they involve smaller units, and to **Skip** new investments in larger units unless they can be strategically located or part of a mixed-income development. The market dynamics suggest that there is room for growth in smaller units, but caution is advised due to the high cost of living relative to income levels.

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.