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 | $1,410 |
| 1 Bedroom | $1,540 |
| 2 Bedrooms | $1,680 |
| 3 Bedrooms | $2,220 |
| 4 Bedrooms | $2,560 |
| 5 Bedrooms | $2,970 |
| 6 Bedrooms | $3,326 |
| 7 Bedrooms | $3,592 |
| 8 Bedrooms | $3,772 |
Zillow median home prices vs Section 8 FMR rates (Data: 2026-08-31)
| Bedrooms | Monthly FMR | Median Price | 1% Rule | Grade |
|---|---|---|---|---|
| 1BR | $1,540 | $84,248 | 1.83% | A+ |
| 2BR | $1,680 | $183,789 | 0.91% | C |
| 3BR | $2,220 | $309,894 | 0.72% | D |
| 4BR | $2,560 | $502,424 | 0.51% | F |
| 5BR | $2,970 | $755,365 | 0.39% | F |
U.S. Census Bureau data (2024)
The economics of Section 8 in ZIP code 38120, located in Memphis, TN, within Shelby County, are straightforward when analyzed. The SAFMR (Small Area Fair Market Rent) for a two-bedroom apartment in this specific ZIP code for FY 2024 is set at $1570. This figure represents the maximum amount that the housing authority will pay on behalf of eligible tenants. It's important to note that the SAFMR is specifically tailored for this ZIP code, meaning it reflects the local rental market conditions more accurately than a broader county or metro-level figure.
The local market rent for a two-bedroom apartment, as indicated by ZORI (Zillow Observed Rent Index), is currently $1530. This suggests that the SAFMR is slightly above the average market rent, which can be beneficial for landlords. However, the actual reimbursement received from a voucher is determined by a combination of factors including the tenant's portion of the rent and utility allowances.
When a tenant uses a Section 8 voucher, they are typically responsible for paying approximately 30% of their adjusted monthly income towards rent. The remaining amount is covered by the housing authority up to the SAFMR limit. Utility allowances are also provided, but these vary based on the size of the unit and other factors. For a two-bedroom apartment, the utility allowance might be around $200 per month, though this can fluctuate.
To illustrate, if a tenant's portion of the rent is $450 and the utility allowance is $200, the total reimbursement to the landlord would be $650 plus whatever amount is left to reach the SAFMR limit of $1570. Therefore, the landlord would receive the full $1570 for the rent, assuming the tenant’s income allows for the full SAFMR to be reached.
In ZIP 38120, where the SAFMR exceeds the ZORI, landlords can expect a slight surplus when renting to Section 8 tenants. This surplus is the difference between the SAFMR and the local market rent, which in this case is $40 per month. Thus, landlords are effectively receiving a higher rate than the average market rent for a two-bedroom apartment in this area.
However, it's crucial for landlords to understand that while the SAFMR provides a higher benchmark than the local market rent, the actual amount paid by the housing authority depends on the tenant’s income and any changes in utility allowances. Landlords should review individual tenant cases and ensure compliance with all regulations to maximize benefits from Section 8 participation.
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.