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 | $1,530 |
| 1 Bedroom | $1,720 |
| 2 Bedrooms | $1,970 |
| 3 Bedrooms | $2,390 |
| 4 Bedrooms | $3,020 |
| 5 Bedrooms | $3,503 |
| 6 Bedrooms | $3,923 |
| 7 Bedrooms | $4,237 |
| 8 Bedrooms | $4,449 |
Zillow median home prices vs Section 8 FMR rates (Data: 2026-08-31)
| Bedrooms | Monthly FMR | Median Price | 1% Rule | Grade |
|---|---|---|---|---|
| 2BR | $1,970 | $388,471 | 0.51% | F |
| 3BR | $2,390 | $440,003 | 0.54% | F |
U.S. Census Bureau data (2024)
Investors considering Paterson, NJ (ZIP 07501) often have valid concerns regarding the feasibility of renting properties through the Section 8 program. Here, we address three key objections with the available data.
Objection 1: Will Fair Market Rent (FMR) of $1,510 for ZIP 07501 in fiscal year 2024 cover the mortgage on a $474,301 home?
The FMR set by the U.S. Department of Housing and Urban Development (HUD) is designed to ensure that rental units are affordable for low-income families. However, it does not guarantee that the rent will cover the mortgage on a property valued at $474,301. In fact, the FMR is significantly lower than what would be required to service such a high-value mortgage. Landlords should calculate their mortgage payments based on current interest rates and loan terms to determine if the FMR can support their financial needs.
Objection 2: Is there enough renter demand at 83.9%?
The occupancy rate of 83.9% suggests a robust demand for rental housing in Paterson, NJ. This figure indicates that the majority of rental units are occupied, which is a positive sign for investors looking to secure tenants. While this percentage is strong, it does not account for the specific demand for Section 8 rental units. To fully assess demand, landlords must consider the local availability of vouchers and the competition for these units among potential tenants.
Objection 3: Will vouchers keep pace with market rents of $1,992?
The market rent of $1,992 exceeds the FMR of $1,510, indicating a gap between the amount HUD will reimburse and the actual market value. This discrepancy poses a risk for landlords who might face challenges in covering their expenses solely through voucher payments. To mitigate this, landlords could seek additional income sources or consider properties that are below the median home value, thereby ensuring that the FMR covers a larger portion of their costs. However, the data does not provide insights into how quickly vouchers might adjust to market conditions or any plans HUD has to increase FMRs in response to rising costs.
In conclusion, while the data shows a high occupancy rate and sets an FMR, it also highlights the need for careful financial planning. Investors must balance the guaranteed income from Section 8 with the realities of mortgage payments and market rents. Paterson, NJ, presents opportunities but requires a thorough understanding of the local housing market and the specifics of the Section 8 program.
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.