Section 8 Fair Market Rent (FMR) for ZIP 27707 - 2027

Investment Score for ZIP 27707

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	$1,490
1 Bedroom	$1,550
2 Bedrooms	$1,740
3 Bedrooms	$2,150
4 Bedrooms	$2,480
5 Bedrooms	$2,877
6 Bedrooms	$3,222
7 Bedrooms	$3,480
8 Bedrooms	$3,654

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
1BR	$1,550	$247,340	0.63%	D
2BR	$1,740	$268,956	0.65%	D
3BR	$2,150	$382,726	0.56%	F
4BR	$2,480	$645,585	0.38%	F
5BR	$2,877	$911,166	0.32%	F

Demographics & Housing Statistics

U.S. Census Bureau data (2024)

### Market Analysis for ZIP Code 27707 (Durham, NC) #### Section 8 Voucher Dynamics The Fair Market Rent (FMR) figures for ZIP code 27707 in Durham, North Carolina, provide insight into the rental market dynamics for low-income households utilizing Section 8 vouchers. According to the 2026 FMR data: - 0BR units have an FMR of $1430. - 1BR units have an FMR of $1520. - 2BR units have an FMR of $1730, which is 27.9% of the median household income. - 3BR units have an FMR of $2140. - 4BR units have an FMR of $2530. These FMRs represent the maximum rent that a Section 8 voucher holder can pay based on the size of their unit. However, the actual rents in the area are significantly higher. For instance, the Zillow median price for a 2BR unit is $276,169, which translates to a monthly rent of approximately $1330 if we assume a typical cap rate of 5%. This calculation is based on the price-to-rent ratio, which is 13.3x in this case. Therefore, the actual rent for a 2BR unit would be around $21,000 annually, or $1750 per month. This means that the actual rent for a 2BR unit is about $20 more than the FMR. The constraints for voucher holders are evident: they would need to find landlords willing to accept a rent of $1730, which is below the market rate. Additionally, voucher holders must contribute 30% of their adjusted income towards rent, making it challenging to afford even the FMR rates without significant subsidies. #### Affordability & Renter Profile ZIP code 27707 has a population of 51,274, with 52.3% of residents being renters. This indicates a robust rental market with a high demand for housing. The occupancy rate of 92.4% suggests that the market is relatively tight, with few vacant units available. Given the median household income of $74,406, the affordability of housing is a critical issue. The fact that 2BR units cost 27.9% of the median income highlights the financial strain on renters, especially those relying on Section 8 vouchers. The high rent-to-income ratio and the tight market conditions imply that there is a significant gap between what renters can afford and what is available. This gap is particularly pronounced for low-income families who rely on Section 8 vouchers, as the actual rents far exceed the FMRs. Consequently, the market is likely to remain competitive, with landlords having the upper hand due to the scarcity of units and the high demand. #### Investor Angle From an investor perspective, the key question is whether properties can generate positive cash flow at the FMR levels. Based on the FMR data and the Zillow median price, let's analyze the potential cash flow for a 2BR unit: - Zillow median price: $276,169 - Assumed annual rent: $21,000 (based on a 5% cap rate) - Monthly rent: $1750 - FMR for 2BR: $1730 If an investor were to purchase a 2BR unit at the Zillow median price, the expected annual rent would be $21,000. However, the FMR restricts the rent to $1730 per month, which is slightly below the market rate of $1750. This implies that while the property might still generate some positive cash flow, it would be minimal. Other factors such as maintenance costs, property taxes, and insurance would further reduce the net income. The investment grade for this ZIP code would be considered moderate to low, given the tight market conditions and the limited ability to charge market rates when renting to Section 8 voucher holders. Investors should carefully consider these factors before entering the market. #### Specific Actionable Insights 1. **Focus on Smaller Units**: Given the high rent-to-income ratio, smaller units (0BR and 1BR) might offer better opportunities for positive cash flow. The FMR for 0BR units is $1430, and for 1BR units, it is $1520. These lower FMRs could make it easier to find tenants who can afford the rent, even if it is below market rates. 2. **Consider Alternative Financing Options**: With the Zillow median price at $276,169, purchasing properties outright might not be feasible for all investors. Alternative financing options, such as hard money loans or partnerships, could help mitigate the initial capital outlay and improve cash flow. 3. **Seek Out Subsidies**: In addition to Section 8 vouchers, other local and state subsidies might be available to help bridge the gap between FMR and market rates. Researching and applying for these additional subsidies could enhance the financial viability of investments in this ZIP code. #### Bottom Line For Section 8-focused investors, the recommendation for ZIP code 27707 is to **Hold**. While the market is tight and offers opportunities, the high rent-to-income ratio and the minimal positive cash flow at FMR levels suggest that buying properties in this ZIP code might not be the most financially advantageous move. Investors should carefully evaluate the potential for subsidies and focus on smaller units to maximize their chances of generating positive cash flow. However, the overall market conditions indicate that skipping this ZIP code might be prudent unless there are unique circumstances or additional financial support mechanisms available.

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.