Section 8 Fair Market Rent (FMR) for ZIP 21702 - 2027

Investment Score for ZIP 21702

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	$1,740
1 Bedroom	$1,820
2 Bedrooms	$2,010
3 Bedrooms	$2,560
4 Bedrooms	$3,020
5 Bedrooms	$3,503
6 Bedrooms	$3,923
7 Bedrooms	$4,237
8 Bedrooms	$4,449

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	$2,010	$268,364	0.75%	D
3BR	$2,560	$424,364	0.6%	D
4BR	$3,020	$558,441	0.54%	F
5BR	$3,503	$691,997	0.51%	F

Demographics & Housing Statistics

U.S. Census Bureau data (2024)

### Market Analysis for ZIP Code 21702 (Frederick, MD) #### Section 8 Voucher Dynamics In ZIP code 21702, the Fair Market Rent (FMR) for a two-bedroom apartment is set at $1780 per month. This figure represents 20.0% of the median household income of $106,983, which is a reasonable proportion considering the national standard that housing should cost no more than 30% of a household’s income. However, the actual rental market in Frederick, MD, appears to be significantly higher than the FMR. For instance, the Zillow median price for a two-bedroom home is $271,844, which translates into a monthly rent of approximately $12.7 times the FMR, or around $22,657 per year. This suggests that landlords who participate in the Section 8 program are likely to face constraints due to the disparity between FMR and market rents. Landlords might find it challenging to cover their costs, including mortgage payments, maintenance, and other expenses, with the lower FMR rates compared to what the market would typically bear. #### Affordability & Renter Profile The renter population in ZIP code 21702 constitutes 34.8% of the total population of 49,605. Given the high median household income of $106,983, it is evident that the majority of renters in this area are likely middle-class individuals or families who choose to rent rather than purchase property. The occupancy rate of 95.2% indicates a robust demand for rental properties, suggesting that the market is relatively tight. This high occupancy rate also implies that there is little room for vacant units, which can drive up rental prices and make it difficult for lower-income households to find affordable housing. Given the high median income and the fact that the FMR for a two-bedroom unit is only $1780, it is clear that the market is not particularly favorable for low-income renters. The average renter would need to earn approximately $21,360 annually to afford a two-bedroom apartment at the FMR rate, which is far below the median household income. Therefore, the typical renter profile is likely to include those who can afford market-rate rents, making it less accessible for lower-income individuals who rely on Section 8 vouchers. #### Investor Angle From an investor perspective, the ZIP code 21702 presents a mixed picture when it comes to cash flow and investment grade. The FMR rates are significantly lower than the market rates, which means that landlords participating in the Section 8 program will have to manage their costs carefully. For example, a two-bedroom apartment rented at the FMR rate of $1780 would generate annual income of $21,360, which is much lower than the potential market rent of $22,657. To determine if this ZIP code is cash-flow positive at the FMR rate, we must consider the typical costs associated with owning and renting out a property. These costs include mortgage payments, property taxes, insurance, maintenance, and utilities. Assuming a conservative estimate where these costs amount to about 70% of the market rent, the annual cost would be around $15,860. At the FMR rate, the landlord would receive $21,360 annually, leaving a net positive cash flow of $5,500 per year. However, this calculation assumes that the landlord can cover all costs with the FMR rate, which might be challenging given the high market rents. The investment grade of this ZIP code would depend on the balance between the FMR and the market rent. While the FMR provides a stable and predictable income source, the gap between FMR and market rates could make it less attractive for investors seeking higher returns. Additionally, the high occupancy rate suggests that there is strong demand for rental properties, but the limited availability of affordable housing could pose challenges for Section 8 voucher holders. #### Specific Actionable Insights 1. **Focus on Smaller Units**: Given the high price-to-FMR ratio, investors should consider focusing on smaller units such as one-bedroom apartments. The FMR for a one-bedroom unit is $1600, which is still significantly lower than the market rate but might offer better cash flow relative to the costs. For example, a one-bedroom apartment rented at the FMR rate would generate $19,200 annually, which could be more manageable for covering expenses. 2. **Consider Multi-Family Properties**: Multi-family properties can provide economies of scale and potentially higher overall cash flow. If an investor owns a multi-unit building, they can spread the fixed costs across multiple units, making it more feasible to operate at FMR rates. For instance, if a three-bedroom unit is rented at the FMR rate of $2250, the annual income would be $27,000. If the building has several units, the combined income could offset the higher costs associated with larger properties. 3. **Evaluate Property Location and Condition**: In a tight rental market like ZIP 21702, the location and condition of the property play a crucial role in attracting tenants. Investors should focus on properties in desirable locations and invest in necessary renovations to ensure they meet the quality standards expected by both market-rate and Section 8 tenants. This could help in securing tenants more quickly and reducing vacancy rates. #### Bottom Line For Section 8-focused investors, the recommendation for ZIP code 21702 is to **Hold**. While the market is tight and there is strong demand for rental properties, the significant gap between FMR and market rates makes it challenging to achieve high returns. Investors should carefully evaluate the specific units and properties they own or plan to acquire, focusing on smaller units and multi-family properties to optimize cash flow. Additionally, ensuring that properties are well-maintained and located in desirable areas can help in attracting and retaining tenants, thereby improving the overall viability of the investment. ZIP code 21702 is not ideal for new investors looking to enter the Section 8 market due to the high market rents and the limited number of affordable units. However, for existing investors who already have properties in the area, maintaining them and possibly upgrading smaller units can be a strategic approach to continue benefiting from the strong rental demand while adhering to the FMR guidelines.

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.