Section 8 Fair Market Rent (FMR) for ZIP 21042 - 2027

Investment Score for ZIP 21042

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	$2,000
1 Bedroom	$2,140
2 Bedrooms	$2,640
3 Bedrooms	$3,300
4 Bedrooms	$3,670
5 Bedrooms	$4,257
6 Bedrooms	$4,768
7 Bedrooms	$5,149
8 Bedrooms	$5,406

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	$2,640	$335,079	0.79%	D
3BR	$3,300	$644,801	0.51%	F
4BR	$3,670	$836,021	0.44%	F
5BR	$4,257	$1,046,910	0.41%	F

Demographics & Housing Statistics

U.S. Census Bureau data (2024)

### Market Analysis for ZIP Code 21042 (Ellicott City, MD) #### Section 8 Voucher Dynamics The Fair Market Rent (FMR) for ZIP code 21042, as per the 2026 figures, is set at $2480 for a two-bedroom unit. This amount represents 15.7% of the median household income of $190,061 in Ellicott City, indicating that it is relatively affordable for those earning the median income. However, the actual rent market in this area is significantly higher, with the Zillow median price for a two-bedroom home being $338,741. The price-to-FMR ratio of 11.4x suggests that the actual market rents far exceed the FMR, creating a significant gap between what voucher holders can afford and the prevailing rental rates. This gap imposes several constraints on voucher holders. For instance, they may struggle to find landlords willing to accept the voucher due to the lower payment compared to market rates. Additionally, the limited number of units available at or below FMR means that voucher holders face intense competition for these units, often leading to long wait times and fewer options. #### Affordability & Renter Profile Ellicott City has a population of 43,327, with 15.3% of residents being renters. The occupancy rate of 98.2% indicates that the housing market is very tight, with few vacant units available. Given the high median household income of $190,061, the typical renter in this area likely has above-average earnings but still faces challenges in finding affordable housing. The high price-to-FMR ratio further exacerbates the affordability issue, making it difficult for low-income households to secure rental properties without assistance. The tight market conditions suggest that there is little oversupply of rental units. Landlords who own properties in this area can command premium rents, which are well above the FMR levels. This makes it particularly challenging for Section 8 voucher holders to find suitable housing, as they are limited to units that cost no more than the FMR. #### Investor Angle From an investor’s perspective, the ZIP code 21042 presents a mixed picture when considering the FMR and actual rental prices. While the median household income is high, the actual market rents are also extremely high, with a Zillow median price for a two-bedroom home at $338,741. The FMR of $2480 for a two-bedroom unit is only a fraction of this price, indicating that properties rented at FMR would likely be cash-flow negative for most investors. However, the high demand for rental properties and the tight market conditions mean that investors could potentially benefit from the long-term appreciation of property values. The challenge lies in balancing the short-term financial losses against the potential for long-term gains. Given the high price-to-FMR ratio, the investment grade for Section 8-focused investors would be low, as the cash flow from renting at FMR would not cover the mortgage payments and other expenses associated with property ownership. #### Specific Actionable Insights 1. **Target Lower-Rent Properties**: Investors should focus on acquiring properties that are priced closer to the FMR levels. For example, a two-bedroom unit priced at $2480 or slightly above would be more attractive to voucher holders and could provide a better balance between cash flow and the ability to secure tenants. 2. **Consider Smaller Units**: Given the high price-to-FMR ratio, smaller units such as studios or one-bedroom apartments might offer a better opportunity for cash flow. The FMR for a one-bedroom unit is $2020, which is still significantly lower than the Zillow median price but might be more feasible for some landlords to accept. 3. **Explore Government Programs**: Investors might want to explore additional government programs that can supplement the income from Section 8 vouchers. For instance, some areas have local subsidies or tax incentives for landlords who accept Section 8 vouchers, which could help offset the lower rents. #### Bottom Line Given the high price-to-FMR ratio and the tight market conditions, the recommendation for Section 8-focused investors is to **Skip** this ZIP code. The financial constraints imposed by renting at FMR levels make it difficult to achieve positive cash flow, and the high competition for rental properties means that securing tenants could be challenging. Instead, investors might consider ZIP codes with a more favorable price-to-FMR ratio and less competitive market conditions to ensure both financial viability and tenant stability.

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.