Section 8 Fair Market Rent (FMR) for ZIP 35124 - 2027

Location: Birmingham-Hoover, AL | Metro: Birmingham-Hoover, AL HUD Metro FMR Area

Investment Score for ZIP 35124

Monthly Rent (2BR)

$1,800

Median Price (2BR)

$215,577

1% Rule

0.83%

Annual Yield

10.02%

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	$1,540
1 Bedroom	$1,650
2 Bedrooms	$1,800
3 Bedrooms	$2,260
4 Bedrooms	$2,540
5 Bedrooms	$2,946
6 Bedrooms	$3,300
7 Bedrooms	$3,564
8 Bedrooms	$3,742

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	$1,800	$215,577	0.83%	C
3BR	$2,260	$300,820	0.75%	D
4BR	$2,540	$452,170	0.56%	F
5BR	$2,946	$593,640	0.5%	F

Demographics & Housing Statistics

U.S. Census Bureau data (2024)

Population

25,238

Median Household Income

$99,726

Housing Units

10,176

Renter Percentage

16.2%

Occupancy Rate

97.3%

Renter Occupied

1,603

When considering whether to purchase a property in ZIP 35124 (Pelham, AL) for Section 8 investment, follow these steps:

Step 1: Debt Service Coverage: The Fair Market Rent (FMR) for ZIP 35124 in fiscal year 2024 is $1510. This amount must cover the debt service on a property valued at $348,406. To determine if this is possible, calculate the annual rental income and compare it against the annual debt service costs.

If the annual rental income ($1510 per month) is higher than the annual debt service costs, the answer is Yes. Otherwise, it is No.

Step 2: Market Rent Comparison: The Zillow Rent Index (ZORI) for Pelham, AL is $1700. Compare this to the FMR of $1510. If market rent is above the FMR, landlords can potentially charge a higher rent to non-Section 8 tenants, which can help offset lower Section 8 rents. If market rent is at or below the FMR, landlords will likely need to rely solely on Section 8 vouchers.

If the ZORI is above the FMR, the answer is Yes, as there is potential for higher market rents. If the ZORI is at or below the FMR, the answer is No, as relying solely on Section 8 rates might not be financially viable.

Step 3: Demand Analysis: In Pelham, AL, 16.2% of residents are renters, and the average days on market (DOM) is 25 days. Evaluate if this level of demand is sufficient to support a Section 8 property.

A 16.2% rental rate suggests moderate demand. A DOM of 25 days indicates that properties are being rented relatively quickly, which is positive. However, the overall demand for rentals needs to be high enough to ensure a steady stream of Section 8 tenants. If the combination of rental rate and DOM is satisfactory, the answer is Yes. Otherwise, it depends on other factors such as vacancy rates and competition.

In conclusion, the decision to invest in ZIP 35124 for Section 8 properties hinges on the answers to these three questions. If all conditions point towards a positive outcome, then investing in this area is advisable. If any step yields a negative result, reconsider the investment or seek additional data to make an informed decision.

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.