Location: Louisville, 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 | $870 |
| 1 Bedroom | $950 |
| 2 Bedrooms | $1,140 |
| 3 Bedrooms | $1,460 |
| 4 Bedrooms | $1,670 |
| 5 Bedrooms | $1,937 |
| 6 Bedrooms | $2,169 |
| 7 Bedrooms | $2,343 |
| 8 Bedrooms | $2,460 |
Zillow median home prices vs Section 8 FMR rates (Data: 2026-08-31)
| Bedrooms | Monthly FMR | Median Price | 1% Rule | Grade |
|---|---|---|---|---|
| 2BR | $1,140 | $229,619 | 0.5% | F |
| 3BR | $1,460 | $300,051 | 0.49% | F |
| 4BR | $1,670 | $384,469 | 0.43% | F |
| 5BR | $1,937 | $460,683 | 0.42% | F |
U.S. Census Bureau data (2024)
The economics of Section 8 housing in ZIP code 40165, which encompasses Shepherdsville, KY, and Bullitt County, operate under specific parameters that directly impact landlords and small-portfolio investors. The SAFMR (Small Area Fair Market Rent) for a two-bedroom apartment in this ZIP code for fiscal year 2024 is set at $1200. This SAFMR is specifically tailored to the rental conditions within ZIP 40165, ensuring it reflects the local market accurately.
In contrast, the local market rent for a two-bedroom unit, as measured by ZORI (Zillow Observed Rent Index), stands at $1,814. This difference highlights the disparity between what the government deems a fair rent and the actual market rates. Landlords participating in the Section 8 program should understand that the reimbursement they receive from the Housing Choice Voucher program will be based on the SAFMR, not the higher market rents.
A voucher holder's rent payment is calculated as 30% of their adjusted income, plus any applicable utility allowances. For instance, if a tenant's monthly adjusted income is $1,000, their rent contribution would be $300. Utility allowances can vary but are typically around $150-$200 per month, depending on the household size and local utility costs. Therefore, the total reimbursement a landlord might expect from the government, including the tenant's contribution and utility allowances, could be approximately $1500-$1600 per month for a two-bedroom unit.
This calculation means that landlords in ZIP 40165 will face a reimbursement gap when comparing the SAFMR to the local market rent. Specifically, the gap for a two-bedroom apartment is about $614 per month, considering the ZORI of $1,814 and an estimated total reimbursement of $1200. This gap represents the shortfall between the market rent and the amount covered by the Section 8 program, making it important for landlords to consider this economic reality when deciding whether to participate in the program.
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.