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 | $1,100 |
| 1 Bedroom | $1,190 |
| 2 Bedrooms | $1,440 |
| 3 Bedrooms | $1,840 |
| 4 Bedrooms | $2,110 |
| 5 Bedrooms | $2,448 |
| 6 Bedrooms | $2,742 |
| 7 Bedrooms | $2,961 |
| 8 Bedrooms | $3,109 |
Zillow median home prices vs Section 8 FMR rates (Data: 2026-08-31)
| Bedrooms | Monthly FMR | Median Price | 1% Rule | Grade |
|---|---|---|---|---|
| 1BR | $1,190 | $228,309 | 0.52% | F |
| 2BR | $1,440 | $250,810 | 0.57% | F |
| 3BR | $1,840 | $359,365 | 0.51% | F |
| 4BR | $2,110 | $589,832 | 0.36% | F |
| 5BR | $2,448 | $826,013 | 0.3% | F |
U.S. Census Bureau data (2024)
The ZIP code 40206 is situated in Louisville, KY, and represents a densely populated urban area with a total population of 20,161 residents. Nearly half of the residents, 47.4%, are renters, indicating a strong demand for rental properties in the area. The median household income in this neighborhood is $75,798, which suggests that it is a middle-class community with a mix of working professionals and families. The median home value stands at $277,930, reflecting a moderate cost of living compared to other parts of the city.
Moving into the economic landscape of renting, the Fair Market Rent (FMR) for ZIP 40206 as of the fiscal year 2024 is set at $1,350. This figure, established by HUD, serves as a benchmark for housing affordability and is often used to determine eligibility for various housing assistance programs, including Section 8 vouchers. In contrast, the market rent, measured by ZORI (Zillow Observed Rent Index), is slightly lower at $1,305. This difference highlights a potential opportunity for landlords who can offer properties within the FMR range, thereby attracting tenants eligible for Section 8 vouchers.
Considering the profile of this neighborhood, it is well-suited for both hands-off voucher operators and hands-on value-add buyers. For hands-off operators, the high percentage of renters and the alignment of market rents with FMR make it an attractive location for Section 8 properties. These landlords can benefit from the steady stream of government-subsidized rental income without the need for extensive property management efforts. On the other hand, value-add buyers might find opportunities to renovate and upgrade properties, increasing their rental value and potentially capturing a higher market segment. Given the median income and home values, there is room for improvement in property quality, which could lead to higher rents and greater investment returns.
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.