Location: Washington-Arlington-Alexandria, DC | Metro: Washington-Arlington-Alexandria, DC-VA-MD 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 | $2,530 |
| 1 Bedroom | $2,640 |
| 2 Bedrooms | $2,920 |
| 3 Bedrooms | $3,720 |
| 4 Bedrooms | $4,380 |
| 5 Bedrooms | $5,081 |
| 6 Bedrooms | $5,691 |
| 7 Bedrooms | $6,146 |
| 8 Bedrooms | $6,453 |
Zillow median home prices vs Section 8 FMR rates (Data: 2026-08-31)
| Bedrooms | Monthly FMR | Median Price | 1% Rule | Grade |
|---|---|---|---|---|
| 3BR | $3,720 | $533,963 | 0.7% | D |
| 4BR | $4,380 | $720,216 | 0.61% | D |
| 5BR | $5,081 | $832,242 | 0.61% | D |
U.S. Census Bureau data (2024)
A skeptical investor might question whether the Fair Market Rent (FMR) of $2,410 for ZIP 20855 in fiscal year 2024 will sufficiently cover the mortgage on a home priced at $694,422. To address this concern, we must consider the typical mortgage rates and terms. Assuming a 30-year fixed-rate mortgage at an average rate of 4%, the monthly payment on a loan of $694,422 would be approximately $3,337. Clearly, the FMR does not cover the mortgage payment alone, indicating that additional income sources or higher-than-average rental rates would be necessary.
The investor may also doubt if there is sufficient renter demand in ZIP 20855, given that only 25.6% of the housing units are rented. This percentage suggests a relatively low demand for rentals compared to owner-occupied units. However, the rental vacancy rate in the area is crucial to understanding the competition and demand dynamics. A low vacancy rate would imply strong demand despite the lower percentage of rented units. Unfortunately, the data provided does not include the vacancy rate, so we cannot conclusively determine the level of demand based solely on the rental percentage.
A further objection could be whether Housing Choice Vouchers will keep up with market rents of $2,380. The voucher amount is adjusted annually based on the Area Median Income (AMI) and other factors, but it's often lower than the market rate. In ZIP 20855, landlords accepting vouchers should expect to receive less than the market rent. While vouchers can provide a steady stream of tenants, they do not guarantee covering the full cost of market rents. Investors relying on voucher programs should factor in the possibility of receiving a subsidy that is less than the current market rent.
In summary, while ZIP 20855 offers a fair market rent that is above the voucher amount, it falls short of covering the mortgage on a median-priced home. The rental demand appears modest, but without the vacancy rate, it's challenging to gauge the true competition for renters. Lastly, voucher amounts are unlikely to match the full market rent, necessitating a careful assessment of the risks and rewards associated with this investment strategy.
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.