Section 8 Fair Market Rent (FMR) for ZIP 20850 - 2027

Investment Score for ZIP 20850

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	$2,590
1 Bedroom	$2,700
2 Bedrooms	$2,990
3 Bedrooms	$3,810
4 Bedrooms	$4,490
5 Bedrooms	$5,208
6 Bedrooms	$5,833
7 Bedrooms	$6,300
8 Bedrooms	$6,615

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	$2,700	$251,270	1.07%	B
2BR	$2,990	$399,861	0.75%	D
3BR	$3,810	$660,777	0.58%	F
4BR	$4,490	$865,681	0.52%	F
5BR	$5,208	$1,130,078	0.46%	F

Demographics & Housing Statistics

U.S. Census Bureau data (2024)

### Market Analysis for ZIP Code 20850 (Rockville, DC) #### Section 8 Voucher Dynamics In ZIP code 20850, the Fair Market Rent (FMR) for a two-bedroom apartment is set at $2,740 per month. This figure represents 26.1% of the median household income of $125,950, which suggests that it is relatively affordable for the average resident. However, when comparing the FMR to actual rental prices, we find that the Zillow median price for a two-bedroom home is $407,947, translating to a monthly mortgage payment of approximately $1,664 based on a 4.5% interest rate over 30 years. The price-to-FMR ratio is 12.4x, indicating that actual rents are significantly higher than the FMR. This high ratio creates significant constraints for voucher holders. For instance, a Section 8 tenant with a voucher for a two-bedroom unit would struggle to find a property within the FMR limit, given the actual rental prices. The voucher amount of $2,740 would likely cover only a portion of the rent, leaving the tenant to pay the difference out-of-pocket, which could be substantial. #### Affordability & Renter Profile The population of Rockville, DC, is 50,353, with 49.7% of residents being renters. This indicates a robust rental market with a high demand for housing. The occupancy rate stands at 94.4%, suggesting that the market is tight, with few vacant units available. Given the median household income of $125,950, most residents are likely employed in professional or managerial positions, such as those working in government agencies, tech companies, or healthcare facilities. Despite the high median income, the rental market remains challenging for low-income households. The FMR for a three-bedroom unit is $3,460, which is still below the median rent levels. This implies that even families with larger units may face affordability issues. The high price-to-FMR ratio of 12.4x further underscores the difficulty in finding affordable housing options for voucher holders and other low-income renters. #### Investor Angle From an investor perspective, the ZIP code 20850 presents both opportunities and challenges. The FMR for a two-bedroom unit is $2,740, while the Zillow median price suggests a potential monthly mortgage payment of around $1,664. Assuming a conservative vacancy rate of 5% and maintenance costs of 1% of the purchase price ($4,079.47), the total monthly expenses would be approximately $2,076. This leaves a potential monthly cash flow of $664 for a two-bedroom unit. However, the high price-to-FMR ratio means that properties rented at FMR levels will likely have lower occupancy rates due to the limited pool of eligible tenants. This could result in periods of vacancy, reducing overall profitability. Additionally, the tight market and high demand suggest that there may be competition from other investors and landlords who are willing to charge above FMR. The investment grade for this ZIP code can be considered moderate. While the area has a strong economic base and high demand, the high price-to-FMR ratio and limited number of voucher holders make it less attractive for purely Section 8-focused investments. Investors should consider diversifying their tenant base to include both voucher holders and other low-income renters who might be able to afford slightly higher rents. #### Specific Actionable Insights 1. **Target Larger Units**: Given the high FMR for larger units, investors should consider targeting three-bedroom or four-bedroom properties. The FMR for a four-bedroom unit is $4,060, which is closer to the actual rental prices. This would provide better cash flow and a higher likelihood of attracting tenants, including those with Section 8 vouchers. 2. **Diversify Tenant Base**: To mitigate the risk associated with the high price-to-FMR ratio, investors should aim to diversify their tenant pool. This includes renting to individuals and families who may not qualify for Section 8 but can afford slightly higher rents. By doing so, investors can ensure a steady stream of income and reduce the impact of vacancies. 3. **Consider Location-Specific Strategies**: Within ZIP code 20850, certain neighborhoods may offer better opportunities for Section 8-focused investments. For example, areas with more affordable housing options or proximity to public transportation might attract a higher number of voucher holders. Investors should conduct thorough research to identify these pockets of opportunity. #### Bottom Line For Section 8-focused investors, the ZIP code 20850 presents a mixed picture. While there is a strong rental market and high demand for housing, the high price-to-FMR ratio makes it challenging to achieve positive cash flow solely through Section 8 vouchers. Therefore, the recommendation is to **Hold** on to existing investments if they are already generating positive cash flow, but **Skip** new investments unless you can target larger units or diversify your tenant base effectively. ### Summary ZIP code 20850 in Rockville, DC, is characterized by a robust rental market with a high demand for housing. However, the high price-to-FMR ratio poses significant challenges for Section 8 voucher holders and investors focusing exclusively on this program. Diversification of the tenant base and targeting larger units are key strategies for success in this market. Overall, the recommendation is to hold current investments and be cautious about new ones.

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.