Location: Shelby County, KY | Metro: Louisville, KY-IN 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 | $880 |
| 1 Bedroom | $1,010 |
| 2 Bedrooms | $1,160 |
| 3 Bedrooms | $1,380 |
| 4 Bedrooms | $1,710 |
| 5 Bedrooms | $1,984 |
| 6 Bedrooms | $2,222 |
| 7 Bedrooms | $2,400 |
| 8 Bedrooms | $2,520 |
Zillow median home prices vs Section 8 FMR rates (Data: 2026-08-31)
| Bedrooms | Monthly FMR | Median Price | 1% Rule | Grade |
|---|---|---|---|---|
| 2BR | $1,160 | $227,834 | 0.51% | F |
| 3BR | $1,380 | $296,045 | 0.47% | F |
| 4BR | $1,710 | $388,428 | 0.44% | F |
| 5BR | $1,984 | $531,428 | 0.37% | F |
U.S. Census Bureau data (2024)
The ZIP code 40065, located in Shelbyville, Kentucky, presents an interesting scenario when analyzing the renter's perspective and affordability gap. The median household income in this area stands at $77,869, which provides some context for evaluating rental costs.
The market rate for rent, known as the Zillow Observed Rent Index (ZORI), is set at $1,480. This figure represents the average cost a renter would pay for housing in the area. When compared to the median income, the monthly rent at $1,480 constitutes approximately 19% of the annual median income. While this percentage might be manageable for some households, it is important to consider other financial obligations and living expenses.
The Federal Market Rent (FMR) for ZIP 40065 in fiscal year 2024 is $1,130. This is the standard payment amount for Section 8 vouchers, meaning that tenants with these vouchers will have their rent subsidized up to this level. The difference between the ZORI ($1,480) and the FMR ($1,130) highlights a significant affordability gap, where the market rate exceeds the voucher payment by $350 per month.
In ZIP 40065, 31.7% of the population are renters, totaling around 10,200 individuals out of a population of 32,160. This indicates a substantial demand for rental properties. However, the affordability gap suggests that many renters might struggle to cover the market rate without assistance. For landlords, this means that there could be fierce competition for tenants who can afford the higher market rates, while those willing to accept voucher payments might find a steadier stream of tenants but at a lower rate.
The takeaway for landlords considering their strategy should focus on understanding the local tenant demographics and preferences. Accepting Section 8 vouchers can ensure consistent occupancy and stable cash flow, albeit at a lower rate than the market. On the other hand, focusing on cash-paying tenants might yield higher returns but comes with the risk of vacancy if the number of such tenants is limited.
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.