Section 8 Fair Market Rent (FMR) for ZIP 37920 - 2027

Investment Score for ZIP 37920

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	$1,100
1 Bedroom	$1,110
2 Bedrooms	$1,390
3 Bedrooms	$1,740
4 Bedrooms	$2,000
5 Bedrooms	$2,320
6 Bedrooms	$2,598
7 Bedrooms	$2,806
8 Bedrooms	$2,946

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
1BR	$1,110	$211,598	0.52%	F
2BR	$1,390	$243,256	0.57%	F
3BR	$1,740	$338,266	0.51%	F
4BR	$2,000	$452,089	0.44%	F
5BR	$2,320	$540,001	0.43%	F

Demographics & Housing Statistics

U.S. Census Bureau data (2024)

### Market Analysis for ZIP Code 37920 (Knoxville, TN) #### Section 8 Voucher Dynamics The Fair Market Rent (FMR) figures for ZIP code 37920 in Knoxville, TN, provide a benchmark for rental costs that are subsidized by the federal government through the Section 8 housing choice voucher program. For a two-bedroom unit, the FMR is set at $1,330 per month, which represents approximately 24.0% of the median household income in the area. This means that a significant portion of the population can afford rent at this level without substantial financial strain. However, the actual rental market in 37920 is considerably higher than the FMR. The Zillow median price for a two-bedroom property is $241,348, which translates into a monthly rent of about $1,550 based on typical mortgage rates and property tax considerations. Given the price-to-FMR ratio of 15.1x, it becomes evident that the actual rents are far above the FMR. This creates a significant constraint for voucher holders who are limited to paying only up to the FMR amount. As a result, many landlords may find it financially unfeasible to accept Section 8 vouchers due to the gap between FMR and market rent. #### Affordability & Renter Profile ZIP code 37920 has a population of 44,995, with 41.1% of residents being renters. The occupancy rate stands at 89.5%, indicating a fairly tight rental market where demand is relatively high compared to supply. With a median household income of $66,362, the majority of renters are likely to be middle-class families or individuals who can afford modestly priced units but struggle with the higher-end market. Given that 24.0% of the median income goes towards a two-bedroom unit at FMR, it suggests that the market is somewhat affordable for those earning close to the median income. However, the disparity between the FMR and the actual market rent makes it challenging for low-income households to find suitable housing. This tight market dynamic could lead to increased competition among voucher holders and other low-income renters, potentially driving up rents beyond what voucher limits can cover. #### Investor Angle From an investor’s perspective, the ZIP code 37920 presents a mixed picture when considering cash flow at the FMR levels. The FMR for a three-bedroom unit is $1,680, while the Zillow median price for a similar-sized property would translate to a significantly higher rent. If we consider the price-to-FMR ratio of 15.1x, the actual market rent for a three-bedroom unit might be around $25,368 annually, or roughly $2,114 per month. This implies that accepting Section 8 vouchers would result in a substantial reduction in rental income. For instance, a landlord renting a three-bedroom unit at the FMR would receive $1,680 per month, whereas renting it at market value would yield $2,114 per month. The difference of $434 per month could make a significant impact on the overall profitability of the investment. In terms of investment grade, the high price-to-FMR ratio indicates that the market is not particularly favorable for investors focusing solely on Section 8 vouchers. The potential for lower returns and the challenge of finding tenants willing to pay the higher market rent could make this ZIP code less attractive for such investments. #### Specific Actionable Insights 1. **Targeting Middle-Income Renters**: Since the actual market rent is much higher than the FMR, investors should focus on targeting middle-income renters rather than relying solely on Section 8 vouchers. This strategy would help maximize rental income and ensure better cash flow. For example, a three-bedroom unit rented at market value ($2,114 per month) would generate significantly more revenue than one rented at FMR ($1,680 per month). 2. **Dual Strategy Approach**: Investors could adopt a dual strategy approach where they offer a mix of units at both FMR and market rates. This would allow them to cater to voucher holders while also attracting higher-paying tenants. By having a diversified tenant base, they can balance the risk associated with lower rental income from Section 8 units. 3. **Consider Property Upgrades**: To attract middle-income renters and justify higher rents, investors might consider upgrading properties with modern amenities and renovations. This could include features like updated kitchens and bathrooms, energy-efficient appliances, and improved landscaping. Such upgrades can increase the appeal of the property and command higher rental rates. #### Bottom Line Based on the analysis, the recommendation for Section 8-focused investors in ZIP code 37920 is to **Skip**. The high price-to-FMR ratio and the tight rental market suggest that there are limited opportunities for cash flow positivity when relying solely on Section 8 vouchers. Instead, investors should explore areas with a lower price-to-FMR ratio or consider a broader tenant base that includes middle-income renters. This will help mitigate the financial risks and ensure better returns on their investments.

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.