Section 8 Fair Market Rent (FMR) for ZIP 36116 - 2027

Investment Score for ZIP 36116

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	$980
1 Bedroom	$990
2 Bedrooms	$1,140
3 Bedrooms	$1,460
4 Bedrooms	$1,690
5 Bedrooms	$1,960
6 Bedrooms	$2,195
7 Bedrooms	$2,371
8 Bedrooms	$2,490

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	$1,140	$112,733	1.01%	B
3BR	$1,460	$141,903	1.03%	B
4BR	$1,690	$265,573	0.64%	D
5BR	$1,960	$399,123	0.49%	F

Demographics & Housing Statistics

U.S. Census Bureau data (2024)

### Market Analysis for ZIP Code 36116 (Montgomery, AL) #### Section 8 Voucher Dynamics The Fair Market Rent (FMR) figures for ZIP code 36116 in Montgomery, AL, for 2026 indicate that the rent for a two-bedroom apartment is set at $1040. This is a critical benchmark for Section 8 voucher holders who can only afford housing up to this amount. However, the actual rental market dynamics often differ from these guidelines. The Zillow median price for a two-bedroom property in this area is $111,684, which suggests a significant disparity between the cost of ownership and rental prices. Given the high price-to-FMR ratio of 8.9x, it's clear that many properties in this ZIP code are priced well above what a typical Section 8 voucher holder could afford. For instance, a three-bedroom apartment with an FMR of $1340 would likely be out of reach for most voucher holders, as they would struggle to find units renting below this rate. #### Affordability & Renter Profile ZIP 36116 has a population of 45,250, with 50.8% being renters. This indicates a substantial demand for rental properties in the area. The occupancy rate stands at 88.7%, suggesting that there is a relatively strong demand for housing, but also that there might be some supply issues. With a median household income of $55,160, the affordability of housing is a key concern. A two-bedroom apartment at $1040 represents 22.6% of the median income, which is a significant portion of a household’s budget. This makes it challenging for low-income families to find affordable housing without assistance. The high percentage of renters and the tight occupancy rate suggest that the market is somewhat balanced, but there is still a considerable need for affordable units. #### Investor Angle From an investor perspective, the ZIP code 36116 presents a mixed picture. While the FMRs provide a guideline for rental pricing, the actual market prices are much higher. For example, the Zillow median price for a two-bedroom property is $111,684, which translates to a monthly mortgage payment significantly higher than the FMR. Assuming a 30-year fixed-rate mortgage at 4.5% interest, the monthly payment on a $111,684 property would be approximately $550, plus property taxes, insurance, and maintenance costs. If we consider a conservative estimate of $700 in additional expenses, the total monthly cost would be around $1250, far exceeding the FMR of $1040 for a two-bedroom unit. Given the high price-to-FMR ratio, it is unlikely that an investor could achieve positive cash flow by strictly adhering to the FMR guidelines. In fact, the average rent for a two-bedroom apartment in this ZIP code is likely to be closer to the Zillow median price, which means that landlords would need to charge significantly more than the FMR to cover their costs and make a profit. This creates a challenging environment for Section 8-focused investors who must balance the need for affordable rents with the realities of the local market. #### Specific Actionable Insights 1. **Focus on Smaller Units**: Given the high price-to-FMR ratio, investors should focus on smaller units such as one-bedroom apartments, where the FMR is $890. This is more aligned with the actual rental market, and there is a better chance of finding tenants willing to pay close to the FMR. Additionally, the lower FMR for one-bedroom units means that more voucher holders can afford these units, making them a safer bet for consistent occupancy. 2. **Consider Location-Specific Strategies**: Within ZIP 36116, certain areas may have lower rental prices due to factors like proximity to public transportation, schools, or employment centers. Investors should conduct detailed location-specific analyses to identify neighborhoods where the rental prices are closer to the FMR. For example, if an investor can find a one-bedroom apartment in a less desirable part of the ZIP code renting for $890, they can potentially achieve positive cash flow while still serving the needs of low-income households. #### Bottom Line For Section 8-focused investors, ZIP 36116 (Montgomery, AL) is a challenging market due to the high price-to-FMR ratio. The recommendation is to **Skip** investing in larger units like two-, three-, or four-bedroom apartments, as the FMRs are far below the actual market rates. Instead, investors should **Hold** or **Buy** smaller units, particularly one-bedroom apartments, where the FMR is more closely aligned with the actual rental market. This strategy will allow investors to serve the needs of low-income households while maintaining a reasonable chance of achieving positive cash flow. In summary, the high cost of housing relative to the FMR makes it difficult to achieve positive cash flow in this ZIP code, especially for larger units. Investors should carefully evaluate the size and location of potential investments before committing capital.

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.