Section 8 Fair Market Rent (FMR) for ZIP 40229 - 2027

Investment Score for ZIP 40229

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	$1,130
1 Bedroom	$1,230
2 Bedrooms	$1,480
3 Bedrooms	$1,890
4 Bedrooms	$2,170
5 Bedrooms	$2,517
6 Bedrooms	$2,819
7 Bedrooms	$3,045
8 Bedrooms	$3,197

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	$1,480	$220,605	0.67%	D
3BR	$1,890	$252,671	0.75%	D
4BR	$2,170	$327,603	0.66%	D

Demographics & Housing Statistics

U.S. Census Bureau data (2024)

### Market Analysis for ZIP Code 40229 (Louisville, KY) #### Section 8 Voucher Dynamics The Fair Market Rent (FMR) for ZIP code 40229 in Louisville, KY, is set by HUD for 2026. For a two-bedroom unit, the FMR is $1490 per month. This figure is crucial for understanding the dynamics of Section 8 vouchers, which are designed to help low-income families afford housing. However, the actual rent prices in the area can be significantly higher. The Zillow median price for a two-bedroom property is $218,674, which translates to a monthly mortgage payment of approximately $1090 based on a 4.5% interest rate and a 30-year fixed mortgage. When considering property taxes, insurance, and maintenance costs, the total monthly cost for landlords can easily exceed the FMR. Given that the FMR represents only 22.4% of the median household income ($79,936), it is clear that there is a significant gap between what voucher holders can afford and the actual rental prices. This means that landlords who accept Section 8 vouchers must often operate at a loss or very low profit margins, especially if they are paying market rates for their properties. #### Affordability & Renter Profile ZIP code 40229 has a population of 41,299, with 28.2% of residents being renters. The occupancy rate is high at 96.7%, indicating a tight market where most available units are occupied. This suggests that there is a strong demand for rental properties, but the affordability issue remains a challenge. The median household income of $79,936 is relatively high compared to the national average, which could mean that many residents have the financial capacity to pay higher rents. However, the 28.2% of renters who rely on Section 8 vouchers are likely to struggle with finding affordable housing. The price-to-FMR ratio of 12.2x for a two-bedroom unit indicates that the market is highly inflated relative to what HUD deems fair. This makes it difficult for voucher holders to find suitable housing, as landlords may prefer higher-paying tenants over those with vouchers. Additionally, the high occupancy rate suggests that there is little room for new entrants into the rental market, making it even more competitive for voucher holders. #### Investor Angle From an investor perspective, the ZIP code 40229 presents a mixed picture. While the high occupancy rate and strong demand for rentals might seem attractive, the reality is that operating at FMR levels can be challenging. The FMR for a two-bedroom unit is $1490, but the Zillow median price implies a much higher cost basis. If we assume a conservative estimate of $1200 per month in expenses (including mortgage, taxes, insurance, and maintenance), landlords would be operating at a loss or minimal profit when renting out a two-bedroom unit at the FMR. The investment grade for this ZIP code is moderate to low due to the high price-to-FMR ratio and the limited number of units that are both affordable and available for voucher holders. Investors should carefully consider the potential for long-term vacancy or the need to subsidize rents to attract Section 8 tenants. #### Specific Actionable Insights 1. **Focus on Smaller Units**: Given the high price-to-FMR ratio, investors should focus on smaller units such as one-bedroom or studio apartments. The FMR for a one-bedroom unit is $1230, which is closer to the actual rental prices. This can provide a better chance of cash flow positivity while still catering to the needs of voucher holders. 2. **Consider Multi-Family Properties**: Multi-family properties can offer economies of scale and potentially better returns. If an investor purchases a multi-unit building, the average cost per unit can be lower, allowing them to rent out some units at FMR and others at market rates. This strategy can help balance the financial burden of accepting Section 8 vouchers. 3. **Engage with Local Housing Authorities**: Building relationships with local housing authorities can help ensure a steady stream of voucher holders. These authorities often have programs to incentivize landlords to accept vouchers, such as expedited processing times or additional subsidies. Engaging with these programs can improve the financial viability of investing in Section 8 properties. #### Bottom Line For investors focused on Section 8 vouchers, the recommendation for ZIP code 40229 is to **Skip**. The high price-to-FMR ratio and the limited number of affordable units make it difficult to achieve positive cash flow. While there is a strong demand for rentals, the financial constraints imposed by operating at FMR levels outweigh the benefits for most investors. Those who do choose to invest should focus on smaller units and consider multi-family properties to mitigate risks. However, given the current market conditions, it is advisable to look elsewhere for more financially viable opportunities.

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.