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 | $1,270 |
| 1 Bedroom | $1,370 |
| 2 Bedrooms | $1,490 |
| 3 Bedrooms | $1,870 |
| 4 Bedrooms | $2,100 |
| 5 Bedrooms | $2,436 |
| 6 Bedrooms | $2,728 |
| 7 Bedrooms | $2,946 |
| 8 Bedrooms | $3,093 |
Zillow median home prices vs Section 8 FMR rates (Data: 2026-08-31)
| Bedrooms | Monthly FMR | Median Price | 1% Rule | Grade |
|---|---|---|---|---|
| 2BR | $1,490 | $126,690 | 1.18% | B |
| 3BR | $1,870 | $182,965 | 1.02% | B |
| 4BR | $2,100 | $223,286 | 0.94% | C |
| 5BR | $2,436 | $259,432 | 0.94% | C |
U.S. Census Bureau data (2024)
The economics of Section 8 in ZIP code 35235, located in Birmingham, Alabama, within Jefferson County, operate under specific financial guidelines. For a two-bedroom rental unit, the SAFMR (Small Area Fair Market Rent) for FY 2024 is set at $1380. This figure represents the maximum amount that the Housing Choice Voucher program will pay for rent in this specific ZIP code.
In comparison, the local market rent for a two-bedroom unit, as measured by ZORI (Zillow Observed Rent Index), stands at $1414. This indicates that landlords can expect to charge slightly above the SAFMR rate but must be aware of the reimbursement limits set by the government.
A landlord participating in the Section 8 program receives payments from the government based on the SAFMR rate, minus the tenant's portion of the rent and any utility allowances. The tenant's portion is typically 30% of their income, which varies depending on the individual's financial situation. Utility allowances are additional payments made by the government to cover electricity, gas, water, and sewer costs, as well as refuse collection and fuel.
To illustrate, if a tenant's portion is calculated at $414 (assuming an income level where 30% aligns with the local market rent difference), then the government would pay the remaining balance up to the SAFMR limit. Therefore, the landlord would receive $966 ($1380 - $414) from the government, plus the utility allowance.
The typical reimbursement gap for a two-bedroom unit in ZIP 35235 is $34 ($1414 - $1380). This means that landlords may face a shortfall of $34 per month unless they can negotiate higher utility allowances or if the tenant's portion exceeds the difference between the SAFMR and ZORI rates.
In summary, landlords in ZIP 35235 can expect a fixed reimbursement rate of $1380 for a two-bedroom unit under the Section 8 program. They should adjust their expectations accordingly, understanding that the local market rent is marginally higher, leading to a potential reimbursement gap of $34. This economic reality shapes the decision-making process for landlords considering participation in the Section 8 program.
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.