Section 8 Fair Market Rent (FMR) for ZIP 36117 - 2027

Investment Score for ZIP 36117

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	$1,110
1 Bedroom	$1,130
2 Bedrooms	$1,290
3 Bedrooms	$1,660
4 Bedrooms	$1,920
5 Bedrooms	$2,227
6 Bedrooms	$2,494
7 Bedrooms	$2,694
8 Bedrooms	$2,829

Investment Analysis by Bedroom Size

Zillow median home prices vs Section 8 FMR rates (Data: 2026-07-31)

Bedrooms	Monthly FMR	Median Price	1% Rule	Grade
2BR	$1,290	$149,444	0.86%	C
3BR	$1,660	$217,735	0.76%	D
4BR	$1,920	$330,961	0.58%	F
5BR	$2,227	$486,854	0.46%	F

Demographics & Housing Statistics

U.S. Census Bureau data (2024)

### Market Analysis for ZIP Code 36117 (Montgomery, AL) #### Section 8 Voucher Dynamics The Fair Market Rent (FMR) for ZIP code 36117 in Montgomery, AL, is set by HUD for 2026. The FMRs are as follows: - 0BR: $1100 - 1BR: $1110 - 2BR: $149,466 (median home value on Zillow) - 3BR: $1670 - 4BR: $1970 However, the price-to-FMR ratio for a 2BR unit is 9.6x, indicating that the median home value is significantly higher than the rent FMR. This suggests that the actual rental market may be higher than the FMRs set by HUD. For instance, a 2BR unit's FMR is $1300, but if we consider the price-to-FMR ratio, the actual rent could be closer to $12,480 annually ($1040 monthly), which is far above the FMR. This discrepancy places significant constraints on voucher holders, who may struggle to find units within their budget. A 2BR unit at $1300 per month represents only 20.9% of the median household income of $74,720, meaning that it is affordable for most residents. However, for those relying solely on Section 8 vouchers, the search for affordable housing is challenging due to the high actual rents compared to FMRs. #### Affordability & Renter Profile ZIP code 36117 has a population of 53,172, with 36.9% being renters. This indicates a substantial rental market, but the occupancy rate of 89.8% suggests that the market is relatively tight. With a median household income of $74,720, the majority of residents can afford the FMRs, but the actual rents are likely higher, making it difficult for lower-income individuals to find suitable housing. Given that 2BR units are priced at 9.6x the FMR, it is clear that the market is not oversupplied. Instead, it is a competitive environment where landlords can charge premiums over the FMR. The high price-to-FMR ratio also implies that there is a significant gap between what HUD considers fair and what the market demands, particularly for 2BR units. #### Investor Angle From an investor perspective, the ZIP code 36117 presents both opportunities and challenges. The FMRs provide a baseline for what HUD considers reasonable rent levels, but the actual market rents are much higher. For example, a 2BR unit at $1300 per month would be cash-flow positive for investors, assuming they can secure tenants willing to pay the higher market rates. However, the high price-to-FMR ratio means that investors focusing exclusively on Section 8 vouchers may face difficulties. The FMRs do not reflect the true market value, and thus, investors might need to rely on non-voucher tenants to achieve profitability. If an investor can manage to lease properties at market rates rather than strictly adhering to FMRs, the potential for positive cash flow increases significantly. The investment grade for this ZIP code would be moderate to high, given the strong demand and relatively high median income. However, the reliance on Section 8 vouchers alone would likely result in negative cash flow due to the disparity between FMRs and actual rents. #### Specific Actionable Insights 1. **Target Non-Voucher Tenants**: Given the high price-to-FMR ratio, investors should target non-voucher tenants who can pay market rates. For a 2BR unit, this would mean aiming for a rent of approximately $1040 per month, which is still below the median home value but above the FMR. This strategy would ensure positive cash flow. 2. **Focus on Smaller Units**: Investors should focus on smaller units like 0BR or 1BR, where the FMRs are lower and closer to the actual market rents. These units are more likely to be rented out at FMR levels without significant loss. 3. **Consider Mixed-Income Developments**: Developing mixed-income properties that cater to both voucher holders and market-rate tenants could be a viable strategy. This approach allows investors to balance the risk associated with lower rents for voucher holders against the higher rents paid by market-rate tenants. #### Bottom Line For Section 8-focused investors, the recommendation for ZIP code 36117 is to **Skip**. The high price-to-FMR ratio makes it challenging to achieve positive cash flow when strictly adhering to FMRs. However, investors who can attract non-voucher tenants willing to pay market rates should consider **Buy** or **Hold**, depending on their ability to manage the property effectively and secure tenants at higher rents. The tight market and high median income suggest strong demand, but the actual rents far exceed the FMRs, making it less favorable for those strictly relying on Section 8 vouchers.

Data Sources: FMR data from HUD (2027). Median home prices from Zillow (2026-07-31). 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.