Section 8 Fair Market Rent (FMR) for ZIP 32940 - 2027

Investment Score for ZIP 32940

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	$1,730
1 Bedroom	$1,990
2 Bedrooms	$2,320
3 Bedrooms	$3,110
4 Bedrooms	$3,530
5 Bedrooms	$4,095
6 Bedrooms	$4,586
7 Bedrooms	$4,953
8 Bedrooms	$5,201

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	$2,320	$277,047	0.84%	C
3BR	$3,110	$423,806	0.73%	D
4BR	$3,530	$610,120	0.58%	F
5BR	$4,095	$803,276	0.51%	F

Demographics & Housing Statistics

U.S. Census Bureau data (2024)

### Market Analysis for ZIP Code 32940 (Melbourne, FL) #### Section 8 Voucher Dynamics In ZIP code 32940, the Fair Market Rent (FMR) for a two-bedroom unit is set at $2,310 per month. This amount represents 25.1% of the median household income of $110,495, indicating that it is relatively affordable for the average resident. However, the actual rental market dynamics show a different picture. The Zillow median price for a two-bedroom home is $281,243, which translates to a price-to-FMR ratio of 10.1x. This suggests that the median price of homes in this area is significantly higher than the rent levels set by FMR. For voucher holders, the FMR serves as a cap on the rent they can pay. In reality, the actual rents in the market might be higher than the FMR, creating a constraint for those using vouchers. For instance, if a landlord charges $2,500 for a two-bedroom unit, a voucher holder would only be able to cover up to $2,310, leaving them short by $190. This could limit their ability to find suitable housing unless landlords agree to accept the FMR as the full rent. #### Affordability & Renter Profile The population of Melbourne, FL (ZIP 32940), stands at 51,727, with 15.8% of residents being renters. The occupancy rate is high at 94.1%, indicating that there is a strong demand for housing in the area. Given the median household income of $110,495, most residents have the financial means to afford homeownership rather than renting. However, the 15.8% of renters likely include individuals who are either young professionals, students, or families with lower incomes who rely on assistance programs like Section 8. The high occupancy rate and the relatively low percentage of renters suggest that the rental market is tight. This means that landlords have more leverage over setting rents, potentially leading to higher prices than what the FMR allows. Consequently, voucher holders may struggle to find units within their budget, especially in a competitive market. #### Investor Angle From an investor perspective, the key question is whether the rental market at FMR levels is cash-flow positive. To determine this, we need to consider the typical expenses associated with owning and managing rental properties, such as mortgage payments, property taxes, insurance, maintenance, and other operational costs. Assuming a conservative estimate of 10% of the purchase price for annual expenses, the cost of owning a two-bedroom home priced at $281,243 would be approximately $28,124 annually, or $2,343.67 monthly. At the FMR of $2,310, the cash flow would be negative, indicating that properties rented at FMR levels would not generate sufficient revenue to cover the costs of ownership. Given these factors, the investment grade for properties in ZIP 32940 appears to be low for Section 8-focused investors. The tight rental market and the high price-to-FMR ratio make it challenging to achieve positive cash flow while adhering to the FMR guidelines. #### Specific Actionable Insights 1. **Focus on Smaller Units**: Given the high price-to-FMR ratio, investors should focus on smaller units like one-bedroom apartments. The FMR for a one-bedroom unit is $2,000, which is still below the median home price but offers a better chance of finding available units. Additionally, the demand for smaller units is often higher among younger renters and single individuals, who may be more flexible in terms of location and amenities. 2. **Consider Outlying Areas**: While the core of Melbourne, FL, has a high price-to-FMR ratio, outlying areas within Brevard County might offer more affordable options. Investors could explore neighborhoods just outside the 32940 ZIP code where the median home prices are lower, thereby improving the price-to-FMR ratio and making it easier to find cash-flow positive properties. 3. **Utilize Property Management Services**: Due to the tight rental market and the potential challenges in attracting tenants who can only pay FMR, investors might benefit from hiring professional property management services. These services can help navigate the complexities of Section 8 requirements and manage the property more effectively, ensuring compliance and reducing vacancy rates. #### Bottom Line For Section 8-focused investors, the recommendation for ZIP 32940 is to **Skip**. The high price-to-FMR ratio and the tight rental market make it difficult to find cash-flow positive properties. Instead, investors should consider outlying areas within Brevard County where the median home prices are lower, or focus on smaller units like one-bedroom apartments that have a slightly better price-to-FMR ratio. This analysis is based solely on the provided data and does not account for any external factors or recent changes in the market. For a comprehensive investment strategy, further research into local rental trends and property availability is recommended.

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.