Location: Memphis, TN | Metro: Memphis, TN-MS-AR 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 | $1,050 |
| 1 Bedroom | $1,140 |
| 2 Bedrooms | $1,250 |
| 3 Bedrooms | $1,650 |
| 4 Bedrooms | $1,900 |
| 5 Bedrooms | $2,204 |
| 6 Bedrooms | $2,468 |
| 7 Bedrooms | $2,665 |
| 8 Bedrooms | $2,798 |
Zillow median home prices vs Section 8 FMR rates (Data: 2026-07-31)
| Bedrooms | Monthly FMR | Median Price | 1% Rule | Grade |
|---|---|---|---|---|
| 2BR | $1,250 | $95,104 | 1.31% | A |
| 3BR | $1,650 | $146,739 | 1.12% | B |
| 4BR | $1,900 | $186,145 | 1.02% | B |
| 5BR | $2,204 | $227,232 | 0.97% | C |
U.S. Census Bureau data (2024)
The economics of Section 8 in ZIP code 38116, located in Memphis, TN, within Shelby County, can be clearly understood by examining the SAFMR (Small Area Fair Market Rent) and comparing it to the local market rent. For a two-bedroom apartment, the SAFMR for FY 2024 is set at $1210. This figure represents the maximum amount that the housing authority will pay towards rent under the Section 8 program for this specific ZIP code.
Local market rent, as measured by ZORI (Zillow Observed Rent Index), stands at $887 for a similar unit. This indicates that the SAFMR is significantly higher than the average market rent, which is beneficial for landlords participating in the Section 8 program. However, the actual reimbursement to landlords is not solely based on the SAFMR but also takes into account the tenant's portion of the rent and any utility allowances.
A Section 8 voucher holder typically pays 30% of their adjusted income towards rent. The housing authority then pays the difference between the tenant’s contribution and the SAFMR, up to the SAFMR limit. Additionally, there may be utility allowances that vary depending on the specifics of the lease and the household’s needs. These allowances are intended to cover costs such as electricity, water, and gas, and they can range from $150 to $300 per month, depending on the number of bedrooms and other factors.
To illustrate, if a tenant's portion of the rent is $363 (assuming an adjusted income of $1210), and the utility allowance is $200, the total reimbursement to the landlord would be $1373 ($363 tenant payment + $1210 housing authority payment - $200 utility allowance). This calculation shows that even though the SAFMR is $1210, the landlord could receive more due to the utility allowance being subtracted from the total rent paid by the tenant and the housing authority.
Given these numbers, the typical reimbursement gap or surplus for a two-bedroom apartment in ZIP 38116 would result in a surplus. Landlords would receive more than the local market rent of $887, ensuring that they are adequately compensated and sometimes even exceeding the standard rental rates in the area. This makes participation in the Section 8 program financially viable and attractive for landlords and small-portfolio investors in this ZIP code.
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.