Section 8 Fair Market Rent (FMR) for ZIP 20854 - 2027

Investment Score for ZIP 20854

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	$3,170
1 Bedroom	$3,310
2 Bedrooms	$3,660
3 Bedrooms	$4,660
4 Bedrooms	$5,490
5 Bedrooms	$6,368
6 Bedrooms	$7,132
7 Bedrooms	$7,703
8 Bedrooms	$8,088

Investment Analysis by Bedroom Size

Zillow median home prices vs Section 8 FMR rates (Data: 2026-08-31)

Bedrooms	Monthly FMR	Median Price	1% Rule	Grade
2BR	$3,660	$932,991	0.39%	F
3BR	$4,660	$849,792	0.55%	F
4BR	$5,490	$1,162,323	0.47%	F
5BR	$6,368	$1,666,202	0.38%	F

Demographics & Housing Statistics

U.S. Census Bureau data (2024)

### Market Analysis for ZIP Code 20854 (Potomac, DC) #### Section 8 Voucher Dynamics The Fair Market Rent (FMR) for ZIP code 20854, as set by HUD for 2026, is quite high compared to typical rent levels in many parts of the country. For a two-bedroom apartment, the FMR is $3,370, which represents 16.2% of the median household income of $250,001. This suggests that the rent levels are relatively affordable for those earning the median income, but it also implies that the cost of living in Potomac, DC, is significantly higher than average. Given that the median household income is so high, the FMR for a two-bedroom unit is only a fraction of what most residents might be able to afford. However, for Section 8 voucher holders, who typically have incomes below 50% of the area median income, the FMR presents a significant challenge. The actual rent levels in Potomac, DC, are likely to be much higher than the FMR, making it difficult for voucher holders to find suitable housing within their budget. #### Affordability & Renter Profile ZIP code 20854 has a population of 50,498, with only 10.6% being renters. This indicates a predominantly owner-occupied market, suggesting that the rental market is tight and competitive. With an occupancy rate of 96.8%, there is very little vacancy in the housing stock, further tightening the market for renters. The high median household income of $250,001 suggests that the majority of residents are well-off, and the rental market is likely dominated by high-income individuals who can afford the premium rents. The Zillow median price for a two-bedroom home in this ZIP code is $966,755, which is over 23.9 times the FMR for a two-bedroom unit. This extremely high price-to-FMR ratio indicates that the rental market is highly unaffordable relative to the FMR, and it is unlikely that many voucher holders would be able to find housing within their budget. #### Investor Angle From an investor perspective, the rental market in ZIP code 20854 appears to be cash-flow positive at the FMR level. However, the reality is that the FMR is far below the actual market rents, which means that landlords who rely solely on Section 8 vouchers will struggle to cover their costs. Given the high median home value and the tight rental market, investors looking to maximize returns should consider targeting the broader market rather than just Section 8 tenants. The investment grade for this ZIP code is likely to be low for Section 8-focused investors due to the limited number of potential tenants and the difficulty in finding properties that fit within the FMR guidelines. Investors who are willing to accept Section 8 vouchers might find themselves competing against other investors who are targeting the broader market, where they can charge much higher rents. #### Specific Actionable Insights 1. **Target the Broader Rental Market**: Given the high price-to-FMR ratio, investors should focus on renting to the broader market rather than exclusively targeting Section 8 voucher holders. This will allow them to achieve higher rental income and potentially better returns on their investments. 2. **Consider Mixed-Income Developments**: Developments that cater to both low-income and higher-income renters could be a viable strategy. By offering a mix of units, some at FMR rates and others at market rates, investors can ensure a steady stream of income while still participating in the affordable housing sector. 3. **Evaluate Property Costs Carefully**: Given the high median home value, investors need to carefully evaluate the purchase price and operating costs of any property they consider. They should aim to acquire properties that offer a balance between affordability and profitability, ensuring that they can cover their expenses even if some units are rented at FMR rates. #### Bottom Line For Section 8-focused investors, the recommendation for ZIP code 20854 is to **skip** this market. The extremely high price-to-FMR ratio and the limited number of potential tenants make it challenging to achieve positive cash flow. Instead, investors should look for markets with lower ratios and a larger percentage of renters, where they can more easily find properties that fit within the FMR guidelines and still generate sufficient returns.

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.