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 | $1,070 |
| 1 Bedroom | $1,160 |
| 2 Bedrooms | $1,400 |
| 3 Bedrooms | $1,790 |
| 4 Bedrooms | $2,060 |
| 5 Bedrooms | $2,390 |
| 6 Bedrooms | $2,677 |
| 7 Bedrooms | $2,891 |
| 8 Bedrooms | $3,036 |
Zillow median home prices vs Section 8 FMR rates (Data: 2026-08-31)
| Bedrooms | Monthly FMR | Median Price | 1% Rule | Grade |
|---|---|---|---|---|
| 2BR | $1,400 | $378,535 | 0.37% | F |
U.S. Census Bureau data (2024)
A skeptical investor might question whether the Fair Market Rent (FMR) of $1,330 for ZIP 40202 in Louisville, KY, for fiscal year 2024 will sufficiently cover the mortgage on a home priced at $337,811. According to recent mortgage interest rates, which are currently around 5%, a monthly mortgage payment on a $337,811 home would be approximately $1,875, assuming a 20% down payment. Clearly, the FMR of $1,330 does not cover this amount. However, it's important to note that the FMR is intended to reflect the average rent for a two-bedroom apartment, and many homes in this area can accommodate higher rents.
The rental vacancy rate in ZIP 40202 stands at 16.7%, which is significantly higher than the state average of 5.9%. This raises concerns about the demand for rental properties at 88.2% occupancy. Despite the high vacancy rate, the demand for rental properties remains strong, especially for those that meet the needs of families and individuals seeking affordable housing. The high vacancy rate could be attributed to a variety of factors, including the availability of owner-occupied homes and seasonal fluctuations.
Another objection might be whether the Housing Choice Voucher program will keep pace with market rents, which are currently around $1,194. While the voucher program aims to provide affordable housing options, the actual amount paid by the program can vary based on individual circumstances and the availability of funds. The typical rent for a 1-bedroom in 40202 is $1,124, suggesting that the voucher amounts may be sufficient for smaller units but could fall short for larger ones. Investors should consider the potential for receiving both the voucher amount and additional rent from tenants to make up the difference.
In summary, while the FMR of $1,330 does not fully cover the mortgage on a $337,811 home, the rental market in ZIP 40202 shows promise for investors willing to target the right demographic. The high rental vacancy rate is a concern, but it does not necessarily indicate low demand. Lastly, the Housing Choice Voucher program may help fill units, although it may not fully match market rents for all property types.
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.