Location: Knoxville, TN | Metro: Knoxville, TN 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 | $1,180 |
| 1 Bedroom | $1,190 |
| 2 Bedrooms | $1,490 |
| 3 Bedrooms | $1,860 |
| 4 Bedrooms | $2,140 |
| 5 Bedrooms | $2,482 |
| 6 Bedrooms | $2,780 |
| 7 Bedrooms | $3,002 |
| 8 Bedrooms | $3,152 |
Zillow median home prices vs Section 8 FMR rates (Data: 2026-07-31)
| Bedrooms | Monthly FMR | Median Price | 1% Rule | Grade |
|---|---|---|---|---|
| 2BR | $1,490 | $259,623 | 0.57% | F |
| 3BR | $1,860 | $374,875 | 0.5% | F |
| 4BR | $2,140 | $509,199 | 0.42% | F |
| 5BR | $2,482 | $592,089 | 0.42% | F |
U.S. Census Bureau data (2024)
A decision tree for evaluating whether to purchase properties in ZIP code 37938 (Knoxville, TN) for Section 8 investment involves three key steps.
Step 1: Clearing Debt Service with FMR
The Fair Market Rent (FMR) for 37938 in fiscal year 2024 is $1340. To determine if this FMR can cover the debt service on a property valued at $386,747, calculate the monthly mortgage payment based on typical financing terms. Assuming a 30-year fixed-rate mortgage at an interest rate of 4.5%, the monthly payment would be approximately $1875. The FMR of $1340 does not clear the debt service on this property, resulting in a No.
Step 2: Comparing Market Rent to FMR
If the landlord proceeds despite the first step's outcome, they must consider the market rent. According to Census ACS data, the average market rent in 37938 is $1353. This is slightly above the FMR of $1340. However, since the FMR cannot cover the debt service, this comparison alone does not justify a purchase. The answer remains No.
Step 3: Assessing Rental Demand
Even if the first two steps were positive, rental demand must also be evaluated. In 37938, 8.6% of residents are renters, and the days on market (DOM) is 23 days. These figures suggest moderate demand. However, given that the FMR does not cover the debt service, the high DOM and percentage of renters do not provide sufficient justification to proceed with a purchase. The final answer is still No.
In summary, purchasing a property in ZIP code 37938 for Section 8 investment is not advisable due to the FMR not covering the debt service on a $386,747 property. Even though the market rent is slightly higher and there is moderate rental demand, these factors alone are insufficient to recommend an investment under the given conditions.
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.