Section 8 Fair Market Rent (FMR) for ZIP 20020 - 2027

Investment Score for ZIP 20020

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	$1,540
1 Bedroom	$1,610
2 Bedrooms	$1,780
3 Bedrooms	$2,270
4 Bedrooms	$2,670
5 Bedrooms	$3,097
6 Bedrooms	$3,469
7 Bedrooms	$3,747
8 Bedrooms	$3,934

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
1BR	$1,610	$129,484	1.24%	A
2BR	$1,780	$236,874	0.75%	D
3BR	$2,270	$390,920	0.58%	F
4BR	$2,670	$503,528	0.53%	F
5BR	$3,097	$593,915	0.52%	F

Demographics & Housing Statistics

U.S. Census Bureau data (2024)

### Market Analysis for ZIP Code 20020 (Washington, DC) #### Section 8 Voucher Dynamics The Fair Market Rent (FMR) for ZIP code 20020 in Washington, DC, for 2026 is set at $1630 for a two-bedroom apartment. This amount represents 36.2% of the median household income of $54,032. However, the actual rental market price for a two-bedroom unit is significantly higher. According to Zillow, the median price for a two-bedroom apartment is $239,649, which translates to a monthly rent of approximately $1997 based on typical mortgage and property management costs. The price-to-FMR ratio is 12.3x, indicating that the actual market rents are substantially above the FMR levels. This means that Section 8 voucher holders face significant constraints in finding suitable housing within their budget. The difference between the FMR ($1630) and the actual market rent ($1997) for a two-bedroom unit is $367 per month. This gap makes it challenging for voucher recipients to find landlords willing to accept the lower FMR rates, especially since the majority of renters in this area (69.8%) rely on such assistance. #### Affordability & Renter Profile ZIP code 20020 has a high percentage of renters (69.8%), suggesting a strong demand for affordable housing. The occupancy rate of 88.0% indicates that the housing stock is relatively well-utilized, but there is still a significant portion of the population that may struggle to find affordable options. Given the median household income of $54,032, many residents are likely to be low-income earners who depend heavily on government assistance programs like Section 8 vouchers. The tight market conditions, combined with the high proportion of renters, suggest that there is a strong need for affordable housing units. However, the reality is that the actual rents are far above the FMR, making it difficult for voucher holders to secure housing. This dynamic could lead to increased competition among voucher holders and potentially drive up rents further as landlords seek to maximize returns. #### Investor Angle From an investor perspective, the ZIP code 20020 presents both opportunities and challenges. The actual market rent for a two-bedroom unit is $1997, while the FMR is $1630. This means that an investor would have to accept a lower rent if they want to participate in the Section 8 program. The difference of $367 per month can be a significant financial burden, especially when considering the cost of acquisition and maintenance. To determine if this ZIP code is cash-flow positive at FMR, we must consider the typical expenses associated with owning a rental property. Assuming a purchase price of $239,649, a mortgage rate of 4%, and other expenses such as property taxes, insurance, and maintenance, the total monthly expenses could range from $1400 to $1600. At the FMR rate of $1630, the cash flow would be minimal, and in some cases, negative depending on the exact costs involved. Given these factors, the investment grade for this ZIP code would be considered moderate to low. While there is a strong demand for affordable housing, the limited ability to charge market rates due to the FMR cap reduces the potential profitability for investors. #### Specific Actionable Insights 1. **Focus on Smaller Units**: Since the FMR for smaller units (one-bedroom) is $1460, which is closer to the median income level, investors might consider focusing on properties with one-bedroom units. This could provide a better balance between affordability and profitability. For example, a one-bedroom unit rented at $1460 might generate a slightly better cash flow compared to a two-bedroom unit rented at $1630. 2. **Seek Government Subsidies**: Investors should explore additional government subsidies and programs that might help offset the lower rents. For instance, the Low-Income Housing Tax Credit (LIHTC) program could provide tax incentives that make the investment more attractive. Additionally, local government initiatives or partnerships with non-profit organizations might offer additional support. 3. **Consider Property Enhancements**: To attract tenants willing to pay the FMR, investors might consider enhancing the property's amenities and features. Improvements such as modern kitchens, updated bathrooms, and energy-efficient appliances could make the property more desirable and potentially increase the likelihood of securing tenants. #### Bottom Line For Section 8-focused investors, the recommendation for ZIP code 20020 is to **Hold**. While there is a strong demand for affordable housing, the significant gap between FMR and market rents makes it challenging to achieve positive cash flow without additional subsidies or property enhancements. Investors should carefully evaluate the potential for government assistance and consider focusing on smaller units where the FMR is closer to the market rent. In summary, the tight market and high rent-to-income ratio indicate that while there is a need for affordable housing, the current FMR levels may not be sufficient to cover the costs of ownership. Therefore, investors should proceed with caution and seek ways to mitigate the financial risks associated with this ZIP code.

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.