Section 8 Fair Market Rent (FMR) for ZIP 20743 - 2027

Investment Score for ZIP 20743

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	$1,730
1 Bedroom	$1,810
2 Bedrooms	$2,000
3 Bedrooms	$2,550
4 Bedrooms	$3,000
5 Bedrooms	$3,480
6 Bedrooms	$3,898
7 Bedrooms	$4,210
8 Bedrooms	$4,421

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	$2,000	$273,155	0.73%	D
3BR	$2,550	$338,327	0.75%	D
4BR	$3,000	$374,737	0.8%	C
5BR	$3,480	$402,778	0.86%	C

Demographics & Housing Statistics

U.S. Census Bureau data (2024)

### Market Analysis for ZIP Code 20743 (Capitol Heights, DC) #### Section 8 Voucher Dynamics The Fair Market Rent (FMR) for ZIP code 20743, as set by HUD for 2026, is $1840 for a two-bedroom apartment. This figure represents 28.9% of the median household income in the area, which stands at $76,466. However, it is important to note that the actual rental prices in the market can be significantly higher than the FMR. For instance, the Zillow median price for a two-bedroom home in this ZIP is $270,570, indicating a price-to-FMR ratio of 12.3x. This suggests that the actual rent for a two-bedroom unit could be around $22,700 annually, or approximately $1891 per month, which is notably above the FMR. Given these dynamics, there are significant constraints for voucher holders. The maximum allowable rent under a Section 8 voucher is capped at the FMR, meaning that tenants with vouchers may struggle to find units that fit within their budget. Landlords who accept Section 8 vouchers are limited to charging no more than $1840 for a two-bedroom unit, which is far below the market rate. This could lead to a shortage of available units for voucher holders and potentially lower returns for landlords compared to market-rate rentals. #### Affordability & Renter Profile In ZIP code 20743, 33.9% of the population are renters, indicating a substantial demand for rental housing. With a median household income of $76,466, the affordability of housing is a critical issue. The FMR for a two-bedroom unit is $1840, which is only 28.9% of the median income. This means that a typical household would need to spend less than a third of their income on rent to meet the FMR guidelines. However, given the high market prices, many renters may find it challenging to afford housing without assistance. The occupancy rate of 94.9% suggests that the rental market is relatively tight, with most available units being occupied. This tightness can contribute to upward pressure on rental prices, making it even harder for low-income renters to find affordable housing. The combination of high market prices and a limited supply of units that fit within the FMR guidelines creates a challenging environment for both renters and landlords. #### Investor Angle From an investor perspective, the ZIP code 20743 presents a mixed picture. The FMR for a two-bedroom unit is $1840, but the actual market rent is likely closer to $1891 per month. If we assume an average market rent of $1891, the potential monthly rent collected from a Section 8 voucher holder would be $1840, leaving a gap of $51 per month. This difference must be considered when evaluating the cash flow and profitability of investments in this area. To determine the investment grade, we need to consider the cost of acquisition and the ongoing expenses. Given the median home price of $270,570, an investor might purchase a property at a slightly lower price, say $250,000, if they are buying a rental unit. Assuming a mortgage rate of 5%, the monthly mortgage payment would be around $1350. Adding in other expenses such as property taxes, insurance, maintenance, and utilities, the total monthly expense could range between $1600 and $1800. This means that while the FMR covers the mortgage payment, it leaves little room for profit unless the investor can manage costs effectively. Therefore, the investment grade for this ZIP code is moderate to low, as the FMR does not provide a significant buffer over the mortgage and operating costs. #### Specific Actionable Insights 1. **Focus on Smaller Units**: Given the high price-to-FMR ratio, investors should focus on smaller units like one-bedroom apartments, where the FMR is $1650. This aligns better with the mortgage and operating costs, providing a more stable cash flow. For example, a one-bedroom unit could be rented out for $1650, which is close to the median mortgage payment of $1350, leaving a small margin for expenses and profit. 2. **Consider Location-Specific Strategies**: Investors should look for properties in areas with lower market prices or higher vacancy rates. While the overall occupancy rate is 94.9%, there may be pockets within the ZIP code where the market is slightly more favorable. Additionally, properties near public transportation or amenities that attract lower-income renters could be more viable. 3. **Maximize Property Value**: To improve the financial viability of Section 8 investments, investors should aim to reduce operating costs through efficient management practices. This includes regular maintenance to avoid costly repairs, negotiating lower utility bills, and possibly seeking tax benefits or subsidies available for affordable housing. #### Bottom Line For Section 8-focused investors, the recommendation for ZIP code 20743 is to **Hold**. The tight rental market and high price-to-FMR ratio make it challenging to achieve positive cash flow. However, the strong demand for rental housing and the potential for stable long-term returns through government-backed vouchers make holding existing properties a reasonable strategy. Investors should carefully evaluate their portfolio and consider focusing on smaller units or areas with lower market prices to optimize their returns.

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.