Section 8 Fair Market Rent (FMR) for ZIP 37087 - 2027

Investment Score for ZIP 37087

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	$1,230
1 Bedroom	$1,280
2 Bedrooms	$1,400
3 Bedrooms	$1,800
4 Bedrooms	$2,170
5 Bedrooms	$2,517
6 Bedrooms	$2,819
7 Bedrooms	$3,045
8 Bedrooms	$3,197

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	$1,400	$298,534	0.47%	F
3BR	$1,800	$401,320	0.45%	F
4BR	$2,170	$589,686	0.37%	F
5BR	$2,517	$617,480	0.41%	F

Demographics & Housing Statistics

U.S. Census Bureau data (2024)

### Market Analysis for ZIP Code 37087 (Lebanon, TN) #### Section 8 Voucher Dynamics The Fair Market Rent (FMR) for ZIP code 37087 is set by HUD for 2026 as follows: - 0BR: $1210 - 1BR: $1260 - 2BR: $1390 (which is 20.3% of the median household income) - 3BR: $1780 - 4BR: $2160 These figures represent the maximum rent that a Section 8 voucher holder can pay for a unit in Lebanon, TN. However, the actual rental market in the area is significantly higher. The Zillow median price for a 2BR home in Lebanon is $296,746, which translates to a monthly mortgage payment of approximately $1,300 assuming a 4.5% interest rate and a 20-year amortization period. This means that the price-to-FMR ratio for a 2BR home is about 17.8 times the FMR, indicating that the actual market rents are far above the FMR levels. This creates a significant constraint for voucher holders, who may struggle to find units that meet their needs within the FMR limits. Given that the FMR for a 2BR unit is only $1390, it is likely that many landlords will not accept Section 8 vouchers due to the disparity between FMR and market rents. Consequently, voucher holders might face limited options and could be forced into lower-quality housing or units that do not match their family size and needs. #### Affordability & Renter Profile The population of Lebanon, TN is 56,655, with 28.1% of households being renters. This indicates a substantial rental market, but it is also a tight market given the occupancy rate of 94.3%. The high occupancy rate suggests that there is little vacancy, and the demand for rental properties is strong. With a median household income of $82,143, the affordability of housing becomes a critical issue. For instance, a 2BR unit at the FMR level ($1390) represents only 20.3% of the median income, which is relatively affordable. However, the actual market rents are much higher, making it difficult for low-income households to afford decent housing without assistance. Given the tight market conditions and the high proportion of renters, there is a significant need for affordable housing. The challenge lies in finding units that are both affordable and suitable for families, particularly those with children who would require larger units like 3BR or 4BR homes. The FMR for these larger units is still below the market rates, making it even harder for voucher holders to find appropriate housing. #### Investor Angle From an investor perspective, the ZIP code 37087 presents a mixed picture. The FMR for a 2BR unit is $1390, while the actual market rent is much higher. However, the FMR is set to ensure that low-income households can afford housing, and this is where the challenge for investors lies. If an investor were to purchase a 2BR home at the Zillow median price of $296,746 and rent it out at the FMR of $1390, they would likely incur a loss. The monthly mortgage payment alone would be around $1,300, leaving little room for profit unless the property has very low operating costs. However, if an investor is willing to accept Section 8 vouchers, they can still achieve positive cash flow by reducing the mortgage burden through strategies such as purchasing at a discount or using financing with lower interest rates. The investment grade for this ZIP code would be considered moderate to low, given the tight market and the disparity between FMR and actual market rents. #### Specific Actionable Insights 1. **Target Larger Units**: Investors should focus on acquiring 3BR and 4BR units, as the FMR for these units is $1780 and $2160 respectively. These units are more likely to attract families who are eligible for Section 8 vouchers, and the higher FMR can help offset some of the financial losses associated with renting at lower rates. 2. **Consider Location and Condition**: Given the tight market, investors should consider purchasing properties in less desirable locations or those that require renovations. While these units may have lower initial values, they can be improved to meet the needs of voucher holders and potentially command slightly higher rents within the FMR guidelines. 3. **Engage with Local Housing Authorities**: Building relationships with local housing authorities can provide valuable insights into the availability of Section 8 vouchers and the specific needs of voucher holders in the area. This can help investors tailor their offerings to better serve the community and increase the likelihood of securing tenants. #### Bottom Line For Section 8-focused investors, the ZIP code 37087 (Lebanon, TN) presents a challenging environment due to the significant gap between FMR and market rents. The recommendation for this ZIP code is to **Skip** investing in 2BR units and instead focus on **Hold** or **Buy** larger units (3BR and 4BR) that are more aligned with the FMR levels and can accommodate families. Engaging with local housing authorities and targeting properties that offer value for renovation can help mitigate some of the financial risks associated with renting at FMR levels. Overall, the investment potential is moderate, but requires careful consideration of unit size and location to be successful.

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.