Location: Birmingham-Hoover, AL | Metro: Birmingham-Hoover, AL HUD Metro FMR Area
Based on 1% Rule: A+ (≥1.5%) | A (≥1.2%) | B (≥1.0%) | C (≥0.8%) | D (≥0.6%) | F (<0.6%)
| Unit Size | Monthly FMR |
|---|---|
| Studio | $1,490 |
| 1 Bedroom | $1,600 |
| 2 Bedrooms | $1,740 |
| 3 Bedrooms | $2,190 |
| 4 Bedrooms | $2,460 |
| 5 Bedrooms | $2,854 |
| 6 Bedrooms | $3,196 |
| 7 Bedrooms | $3,452 |
| 8 Bedrooms | $3,625 |
Zillow median home prices vs Section 8 FMR rates (Data: 2026-08-31)
| Bedrooms | Monthly FMR | Median Price | 1% Rule | Grade |
|---|---|---|---|---|
| 2BR | $1,740 | $218,255 | 0.8% | D |
| 3BR | $2,190 | $383,053 | 0.57% | F |
| 4BR | $2,460 | $497,498 | 0.49% | F |
| 5BR | $2,854 | $673,090 | 0.42% | F |
U.S. Census Bureau data (2024)
The economics of Section 8 housing in ZIP code 35226, which encompasses Hoover, AL, and parts of Jefferson County, are straightforward when analyzed against the financial metrics provided. The SAFMR (Small Area Fair Market Rent) for a two-bedroom apartment in this ZIP code for fiscal year 2024 is set at $1,660. This SAFMR is specific to this ZIP code and reflects the local rental market conditions more accurately than broader county or metropolitan averages.
Local market rents, as measured by ZORI (Zillow Observed Rent Index), stand at $1,759 for a similar two-bedroom unit. This indicates that the SAFMR is slightly below the average market rent in ZIP 35226, suggesting that landlords might need to consider adjusting their expectations when participating in the Section 8 program in this area.
A Section 8 voucher payment consists of two primary components: the subsidy paid directly to the landlord and the tenant's portion of the rent. For a two-bedroom unit, the tenant is typically responsible for paying 30% of their adjusted income towards rent. The remaining amount up to the SAFMR is covered by the housing authority. Additionally, there are utility allowances which vary but can be significant in covering the costs associated with heating, cooling, water, and electricity.
To illustrate, if a tenant's adjusted income is $1,500 per month, they would pay approximately $450 towards rent (30% of $1,500). The housing authority would then cover the difference between the tenant's contribution and the SAFMR, which in this case would be $1,210 ($1,660 - $450).
The total reimbursement to the landlord from a Section 8 voucher for a two-bedroom unit in ZIP 35226 would thus be around $1,660, assuming the tenant's portion and utility allowances add up to this figure. However, given that the local market rent is higher at $1,759, landlords would experience a $99 shortfall per month on average for a two-bedroom unit if they were to rent at the ZORI price.
This reimbursement gap highlights the importance of understanding the local rental market dynamics and the specific SAFMR rates when considering participation in the Section 8 program. Landlords must weigh the benefits of guaranteed payments and lower vacancy rates against the potential for slightly lower monthly revenues compared to market rents.
In conclusion, for ZIP 35226, the typical reimbursement for a two-bedroom unit under the Section 8 program leaves landlords with a $99 monthly gap compared to the local market rent. This gap should be factored into any decision to participate in the program, ensuring that the overall financial impact aligns with the landlord's investment strategy and risk tolerance.
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.