Section 8 Fair Market Rent (FMR) for ZIP 38501 - 2027

Investment Score for ZIP 38501

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	$810
1 Bedroom	$900
2 Bedrooms	$1,120
3 Bedrooms	$1,530
4 Bedrooms	$1,590
5 Bedrooms	$1,844
6 Bedrooms	$2,065
7 Bedrooms	$2,230
8 Bedrooms	$2,342

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
1BR	$900	$143,784	0.63%	D
2BR	$1,120	$238,102	0.47%	F
3BR	$1,530	$317,813	0.48%	F
4BR	$1,590	$422,652	0.38%	F

Demographics & Housing Statistics

U.S. Census Bureau data (2024)

Market Analysis for ZIP Code 38501 (Cookeville, TN) 1. **Section 8 Voucher Dynamics** The Fair Market Rent (FMR) for Cookeville, TN, as of 2026, is set at $1040 for a two-bedroom unit. This amount represents 23.9% of the median household income in the area, which stands at $52,145. However, the Zillow median price for a two-bedroom home in Cookeville is $236,346, indicating that the actual market rent for a two-bedroom unit is significantly higher than the FMR. The price-to-FMR ratio of 18.9x suggests that the actual market rent for a two-bedroom unit could be around $19,576 annually ($1631 monthly), far exceeding the $1040 FMR limit. This creates a significant constraint for voucher holders, who may struggle to find housing that meets their needs within the FMR limits. 2. **Affordability & Renter Profile** With a population of 42,471 and a renter percentage of 51.1%, Cookeville has a substantial number of renters. Given that the occupancy rate is 90.8%, it indicates that the rental market is relatively tight, with few vacancies available. The median household income of $52,145 suggests that many residents are low to middle-income earners, making affordability a key issue. The high renter percentage and occupancy rate indicate that there is strong demand for rental properties, but the limited supply and high market rents suggest that the market is challenging for low-income renters seeking affordable housing. 3. **Investor Angle** From an investor perspective, the ZIP code 38501 offers mixed opportunities. While the demand for rental properties is strong, the actual market rents are much higher than the FMRs set by HUD. For a two-bedroom unit, the FMR is $1040, while the potential market rent is approximately $1631. This means that investors relying solely on Section 8 vouchers would likely face cash flow challenges, as they would need to accept lower rents compared to what the market can bear. The investment grade for this ZIP code would be considered moderate due to the strong demand but the limitations imposed by the FMR caps. 4. **Specific Actionable Insights** - **Rent Adjustment Strategy**: Investors should consider offering a mix of units that cater to both Section 8 voucher holders and market-rate tenants. By having a portion of units priced at or slightly above the FMR, they can ensure a steady stream of income from voucher holders while also renting out other units at market rates to maximize profitability. For example, pricing some units at $1040 and others at $1631 could help balance the portfolio. - **Targeted Marketing**: Given the high renter percentage and the strong demand for housing, targeted marketing towards low-income families and individuals who qualify for Section 8 vouchers could be beneficial. Additionally, marketing towards students and young professionals who might be willing to pay market rates could help fill the remaining units. Cookeville is home to Tennessee Tech University, which adds to the student population and potential market-rate tenants. 5. **Bottom Line** For Section 8-focused investors, Cookeville, TN (ZIP 38501) presents a challenging environment due to the high market rents and the limited FMR cap. While the strong demand for rental properties makes Cookeville attractive, the tight market and high price-to-FMR ratio suggest that it may not be the most profitable area for those strictly relying on Section 8 vouchers. Therefore, the recommendation is to **Skip** this ZIP code if the primary focus is on Section 8 vouchers alone. However, investors who can diversify their tenant base between voucher holders and market-rate tenants might find it **Hold** worthy, given the overall strong demand for rentals in the area. In summary, Cookeville's rental market is competitive, with high demand and limited supply, but the disparity between FMR and actual market rents poses significant challenges for Section 8 voucher holders and investors focusing solely on these vouchers.

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.