Section 8 Fair Market Rent (FMR) for ZIP 38305 - 2027

Investment Score for ZIP 38305

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	$1,040
1 Bedroom	$1,150
2 Bedrooms	$1,500
3 Bedrooms	$1,890
4 Bedrooms	$2,070
5 Bedrooms	$2,401
6 Bedrooms	$2,689
7 Bedrooms	$2,904
8 Bedrooms	$3,049

Investment Analysis by Bedroom Size

Zillow median home prices vs Section 8 FMR rates (Data: 2026-07-31)

Bedrooms	Monthly FMR	Median Price	1% Rule	Grade
2BR	$1,500	$163,013	0.92%	C
3BR	$1,890	$254,951	0.74%	D
4BR	$2,070	$379,848	0.54%	F
5BR	$2,401	$532,092	0.45%	F

Demographics & Housing Statistics

U.S. Census Bureau data (2024)

### Market Analysis for ZIP Code 38305 (Jackson, TN) #### Section 8 Voucher Dynamics The Fair Market Rent (FMR) figures for ZIP code 38305 in Jackson, TN, indicate that the rental market is quite competitive. For a two-bedroom unit, the FMR is set at $1,430 per month, which represents 24.9% of the median household income of $68,977. This suggests that while the rent is relatively high compared to income levels, it is still within a reasonable range for many residents. However, the actual rents in the market can be significantly higher, as evidenced by the Zillow median price for a two-bedroom home being $164,991. The price-to-FMR ratio of 9.6x indicates that the median home value is nearly ten times the monthly rent for a similar-sized unit, suggesting that homeownership is considerably more expensive than renting. For voucher holders, the constraints are clear. The maximum allowable rent under the Section 8 program is capped at the FMR, meaning that tenants with vouchers will struggle to find units that fit within their budget. Given that the occupancy rate is 93.7%, landlords have a strong incentive to charge higher rents, making it difficult for voucher holders to secure housing unless they are willing to accept lower-quality units or live in less desirable areas. #### Affordability & Renter Profile ZIP code 38305 has a significant renter population, with 36.7% of households renting rather than owning. This percentage is slightly above the national average, indicating a robust demand for rental properties. The median household income of $68,977 suggests that the majority of renters are middle-income earners who might find it challenging to afford the higher-end rentals in the area. The fact that 24.9% of the median income goes towards a two-bedroom rental unit implies that there is a considerable financial burden on these renters, especially if they also have other expenses such as utilities and transportation. The market appears to be tight, given the high occupancy rate and the relatively high rent-to-income ratio. This tightness means that there is little room for oversupply, and any new rental units entering the market could potentially face challenges in attracting tenants if they are priced above the FMR. #### Investor Angle From an investor perspective, the ZIP code 38305 offers a mixed picture. The FMR for a two-bedroom unit is $1,430, which is below the Zillow median price for a similar-sized home. This discrepancy suggests that the rental market is more affordable than the home purchase market, making rental investments potentially attractive. However, the price-to-FMR ratio of 9.6x indicates that the cost of purchasing a property is very high relative to the rental income it can generate, which could make it challenging for investors to achieve positive cash flow without significant leverage or economies of scale. To determine the investment grade, we need to consider the potential for rental income versus the cost of acquisition and maintenance. With a median household income of $68,977, the area supports a moderate level of economic activity, but the high rent-to-income ratio suggests that affordability could be a concern. Investors should carefully evaluate the local market conditions and the specific neighborhoods within the ZIP code to ensure that their properties are positioned correctly to attract tenants. #### Specific Actionable Insights 1. **Focus on Smaller Units**: Given the high FMR for larger units, investors should focus on smaller units such as one-bedroom apartments or studios. The FMR for a one-bedroom unit is $1,090, which is more manageable for many renters and aligns better with the median income. This strategy would allow investors to maximize occupancy rates and minimize the risk of vacancy. 2. **Target Affordable Neighborhoods**: Within ZIP code 38305, there are likely neighborhoods where the rental prices are closer to the FMR. Investors should conduct detailed neighborhood analyses to identify areas where the median rent is around $1,430 for a two-bedroom unit. These areas would be more suitable for Section 8-focused investments. 3. **Consider Mixed-Income Developments**: To cater to both voucher holders and non-voucher holders, investors might consider developing mixed-income properties. This approach would involve setting aside a portion of units for low-income tenants at FMR rates while charging market rates for the remaining units. This balance can help ensure steady cash flow and reduce the risk associated with relying solely on Section 8 vouchers. #### Bottom Line For Section 8-focused investors, the recommendation for ZIP code 38305 is to **Hold**. While the rental market is tight and supports a significant number of renters, the high price-to-FMR ratio and the challenge of finding units that fit within the voucher limits make it a risky investment. Investors should proceed cautiously and focus on smaller units or neighborhoods with more affordable rents. Additionally, considering mixed-income developments could provide a more stable and sustainable investment strategy. --- This analysis provides a comprehensive overview of the rental market dynamics in ZIP code 38305, highlighting key factors such as the FMR, renter profile, and investment potential. By focusing on smaller units and affordable neighborhoods, investors can navigate the challenges posed by the high price-to-FMR ratio and the constraints faced by voucher holders.

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.