Section 8 Fair Market Rent (FMR) for ZIP 40214 - 2027

Investment Score for ZIP 40214

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	$900
1 Bedroom	$970
2 Bedrooms	$1,170
3 Bedrooms	$1,490
4 Bedrooms	$1,720
5 Bedrooms	$1,995
6 Bedrooms	$2,234
7 Bedrooms	$2,413
8 Bedrooms	$2,534

Investment Analysis by Bedroom Size

Zillow median home prices vs Section 8 FMR rates (Data: 2026-08-31)

Bedrooms	Monthly FMR	Median Price	1% Rule	Grade
2BR	$1,170	$182,600	0.64%	D
3BR	$1,490	$236,500	0.63%	D
4BR	$1,720	$290,841	0.59%	F
5BR	$1,995	$369,618	0.54%	F

Demographics & Housing Statistics

U.S. Census Bureau data (2024)

### Market Analysis for ZIP Code 40214 (Louisville, KY) #### Section 8 Voucher Dynamics In ZIP code 40214, the Fair Market Rent (FMR) for a two-bedroom apartment is set at $1180 per month for 2026. This figure represents 25.8% of the median household income in the area, which stands at $54,931. The FMR is designed to ensure that low-income families can afford decent housing. However, it is important to understand how these figures compare to actual rents in the market. According to Zillow, the median price for a two-bedroom home in 40214 is $181,421. This translates into a price-to-FMR ratio of approximately 12.8 times, indicating that the median home value is significantly higher than the rent levels set by FMR. For voucher holders, this means they are constrained to finding rental units that do not exceed the FMR. Given that the occupancy rate is 90.3%, landlords have some leverage to charge rents close to or above the FMR, making it challenging for voucher holders to find affordable housing. #### Affordability & Renter Profile The renter population in ZIP code 40214 is substantial, comprising 45.6% of the total population. With a median household income of $54,931, many renters rely on government assistance like Section 8 vouchers to make ends meet. The high occupancy rate suggests that there is a strong demand for rental properties, but the tight budget constraints of many residents mean that affordability is a key issue. Given that 25.8% of the median income goes towards a two-bedroom apartment, it is clear that the market is relatively tight for low-income households. They must carefully manage their finances to cover other essential expenses such as food, healthcare, and transportation. The challenge for renters is exacerbated by the fact that actual rents often exceed the FMR, especially in a competitive market with a high occupancy rate. #### Investor Angle From an investor perspective, the cash flow potential in ZIP code 40214 is influenced by the FMR and the local rental market dynamics. The FMR for a two-bedroom unit is $1180, which is the maximum amount that a landlord can charge if they want to participate in the Section 8 program. To assess whether this ZIP code is cash-flow positive at FMR, we need to consider the typical costs associated with owning and managing rental properties. These costs include mortgage payments, property taxes, insurance, maintenance, and utilities. Assuming a conservative estimate where the combined cost of these items is around $800 per month, a landlord could potentially net about $380 per month from a two-bedroom unit under the Section 8 program. This would be a modest profit margin, but it could still be attractive for investors looking for stable, long-term returns. The investment grade for this ZIP code would be considered moderate. While the demand for rental properties is strong, the limited profit margins and the regulatory requirements of participating in the Section 8 program might deter some investors who seek higher returns. However, for those who prioritize stability and are willing to work within the constraints of the program, 40214 offers a viable opportunity. #### Specific Actionable Insights 1. **Focus on Smaller Units**: Given the high price-to-FMR ratio, investors should focus on smaller units like one-bedroom apartments. The FMR for a one-bedroom unit is $970, which is lower than the median price for a two-bedroom home. This makes it easier to find tenants who can afford the rent without exceeding the FMR limit. 2. **Consider Property Location**: Within ZIP code 40214, certain neighborhoods may offer better opportunities due to varying rental prices and accessibility to amenities. Investors should conduct thorough research to identify areas where rents are closer to the FMR and where there is a higher concentration of voucher holders. 3. **Engage with Local Real Estate Agents**: To navigate the complexities of the Section 8 program and understand the local rental market, investors should engage with experienced real estate agents in Louisville. These agents can provide valuable insights into tenant preferences, market trends, and the specific requirements of the Section 8 program in the area. #### Bottom Line For Section 8-focused investors, ZIP code 40214 presents a mixed picture. While the demand for rental properties is robust, the limited profit margins and the regulatory environment of the Section 8 program suggest that this ZIP code is best suited for investors seeking stable, long-term returns rather than high-risk, high-reward investments. Therefore, the recommendation is to **Hold** on to existing properties in this ZIP code and selectively invest in smaller units that align with the FMR guidelines. This strategy will help maintain a steady cash flow while adhering to the constraints of the Section 8 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.