Section 8 Fair Market Rent (FMR) for ZIP 40216 - 2027

Investment Score for ZIP 40216

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	$820
1 Bedroom	$890
2 Bedrooms	$1,070
3 Bedrooms	$1,370
4 Bedrooms	$1,570
5 Bedrooms	$1,821
6 Bedrooms	$2,040
7 Bedrooms	$2,203
8 Bedrooms	$2,313

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	$1,070	$175,553	0.61%	D
3BR	$1,370	$224,654	0.61%	D
4BR	$1,570	$235,609	0.67%	D

Demographics & Housing Statistics

U.S. Census Bureau data (2024)

### Market Analysis for ZIP Code 40216 (Louisville, KY) #### Section 8 Voucher Dynamics The Fair Market Rent (FMR) for ZIP code 40216 in Louisville, KY, for a two-bedroom apartment is set at $1,080 per month for the year 2026. However, the Zillow median price for a two-bedroom rental property in this area is $173,859, which translates to a monthly rent of approximately $1,449 based on a typical mortgage payment formula (assuming a 30-year fixed-rate mortgage at 4.5% interest). This indicates that the actual rents in the market are significantly higher than the FMR, creating a challenge for Section 8 voucher holders who can only pay up to the FMR amount. The discrepancy between the FMR and actual rents means that voucher holders would need landlords willing to accept the lower FMR rate, potentially limiting their housing options. #### Affordability & Renter Profile ZIP code 40216 has a population of 44,047, with 33.9% being renters. The median household income in this area is $56,441, and the FMR for a two-bedroom apartment represents 23.0% of this median income. Given that the occupancy rate is 91.8%, it suggests that the market is relatively tight, with few vacant units available. This high demand coupled with limited supply makes it difficult for low-income renters to find affordable housing. Additionally, the high price-to-FMR ratio of 13.4x indicates that the cost of owning a home is much higher than renting, further emphasizing the importance of rental affordability for many residents. #### Investor Angle From an investor’s perspective, the key question is whether the FMR rates allow for positive cash flow. Based on the Zillow median price of $173,859, a typical mortgage payment would be around $1,449 per month. If a landlord were to rent out a two-bedroom unit at the FMR rate of $1,080, they would face a significant shortfall in covering the mortgage alone, let alone other expenses such as maintenance, insurance, and property taxes. Therefore, it is unlikely that a landlord could achieve positive cash flow solely relying on FMR rates in this ZIP code. In terms of investment grade, the high price-to-FMR ratio and the tight rental market suggest that the area is not particularly attractive for investors focusing exclusively on Section 8 vouchers. The market dynamics indicate a strong preference for owner-occupied homes or higher-paying tenants, making it challenging for those who want to rely solely on government-assisted housing programs. #### Specific Actionable Insights 1. **Renters' Housing Options**: Landlords should consider offering incentives or amenities to attract Section 8 voucher holders, given the high demand and limited supply. For instance, providing a pet-friendly environment or additional storage space could make properties more appealing to these renters. 2. **Cash Flow Considerations**: Investors looking to purchase properties in ZIP code 40216 should be prepared to either charge above FMR rates or seek alternative sources of income to cover the mortgage and other expenses. Alternatively, they might consider areas with a lower price-to-FMR ratio where positive cash flow is more achievable. 3. **Market Trends**: With the occupancy rate at 91.8%, there is a clear indication that the market is tight. Investors should focus on areas with slightly lower occupancy rates or higher vacancy rates to ensure better chances of finding tenants and maintaining positive cash flow. #### Bottom Line Given the high price-to-FMR ratio and the tight rental market, the recommendation for Section 8-focused investors is to **Skip** ZIP code 40216. The discrepancy between the actual rental prices and the FMR makes it difficult to achieve positive cash flow, and the limited number of vacant units suggests that finding tenants willing to accept the lower FMR rates will be challenging. Investors should look for ZIP codes with more favorable market conditions and a better alignment between FMR and actual rental prices.

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.