Location: Lexington-Fayette, KY | Metro: Lexington-Fayette, KY MSA
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 | $950 |
| 1 Bedroom | $1,170 |
| 2 Bedrooms | $1,370 |
| 3 Bedrooms | $1,890 |
| 4 Bedrooms | $2,040 |
| 5 Bedrooms | $2,366 |
| 6 Bedrooms | $2,650 |
| 7 Bedrooms | $2,862 |
| 8 Bedrooms | $3,005 |
Zillow median home prices vs Section 8 FMR rates (Data: 2026-07-31)
| Bedrooms | Monthly FMR | Median Price | 1% Rule | Grade |
|---|---|---|---|---|
| 1BR | $1,170 | $178,288 | 0.66% | D |
| 2BR | $1,370 | $308,168 | 0.44% | F |
| 3BR | $1,890 | $525,545 | 0.36% | F |
| 4BR | $2,040 | $790,624 | 0.26% | F |
| 5BR | $2,366 | $1,077,469 | 0.22% | F |
U.S. Census Bureau data (2024)
The ZIP code 40502 in Lexington, KY, presents an interesting scenario for both renters and landlords. The median income in this area stands at $76,948, while the market rate for rent is $1,353 per month, known as the ZORI (Zillow Observed Rent Index). This figure represents the typical rent paid by tenants for rental properties in the area.
In comparison, the Fair Market Rent (FMR) for the fiscal year 2024 is set at $1,320 for this ZIP code. This amount is significant because it is the standard used to determine the payment levels for housing vouchers. Essentially, it means that a family receiving a housing voucher would have their rent subsidized up to this level.
The affordability gap between the median income and the market rate rent is substantial. A household earning the median income would allocate approximately 17.6% of their monthly income towards paying the market rate rent. However, if we consider the FMR, the percentage slightly decreases to 17.2%. Given that 40.3% of the 26,122 population are renters, the competition among landlords is likely to be fierce, especially in attracting tenants who can pay the market rate.
For landlords considering whether to accept voucher payments or opt for cash-paying tenants, the decision hinges on several factors. Accepting vouchers means securing a steady, government-backed income, albeit at a lower rate than the market might offer. On the other hand, relying on cash-paying tenants could potentially yield higher monthly rents but also comes with the risk of vacancies due to the high cost of living relative to income.
The takeaway for landlords is that ZIP 40502 is a mixed market. While there is a significant portion of the population that could afford market-rate rents, the presence of a large number of renters suggests that competition will be intense. Landlords should weigh the benefits of guaranteed income through vouchers against the potential for higher rent from cash-paying tenants, keeping in mind the local economic conditions and the overall demand for affordable housing.
Data Sources: FMR data from HUD (2027). Median home prices from Zillow (2026-07-31). 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.