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 | $840 |
| 1 Bedroom | $1,020 |
| 2 Bedrooms | $1,200 |
| 3 Bedrooms | $1,650 |
| 4 Bedrooms | $1,790 |
| 5 Bedrooms | $2,076 |
| 6 Bedrooms | $2,325 |
| 7 Bedrooms | $2,511 |
| 8 Bedrooms | $2,637 |
Zillow median home prices vs Section 8 FMR rates (Data: 2026-07-31)
| Bedrooms | Monthly FMR | Median Price | 1% Rule | Grade |
|---|---|---|---|---|
| 2BR | $1,200 | $187,526 | 0.64% | D |
| 3BR | $1,650 | $247,753 | 0.67% | D |
| 4BR | $1,790 | $273,303 | 0.65% | D |
| 5BR | $2,076 | $350,499 | 0.59% | F |
U.S. Census Bureau data (2024)
With a Fair Market Rent (FMR) set at $1050 for ZIP 40505 in Lexington, KY, for fiscal year 2024, landlords must ensure their rental properties meet this benchmark to remain competitive. The Zillow Observed Rent Index (ZORI) stands at $1,331, indicating that the actual market rent is significantly higher than the FMR, providing a clear opportunity for profit. Given the median home value of $228,339, it's evident that the area has a mix of homeowners and renters, with 40.2% of residents choosing to rent. This substantial renter share suggests a robust demand for rental properties. Landlords should also note the median income of $58,206, which supports the ability of tenants to afford the higher rents commanded by the market. The Days on Market (DOM) figure of 23 days shows that properties are moving quickly, reflecting a dynamic rental market. Additionally, the price-cut share of just 0.2% indicates that landlords rarely need to reduce their asking prices to attract tenants, further underscoring the strength of the local rental market.
For Section 8 investors, these numbers present a mixed picture. While the FMR is lower than the market rent, the high demand for rentals and quick turnover times make ZIP 40505 a viable option. However, the low price-cut share implies that landlords might face challenges in finding tenants willing to pay the FMR without additional incentives. In conclusion, for those considering Section 8 participation, Lexington, KY's ZIP 40505 offers potential but requires careful consideration of the property's location and amenities to attract tenants effectively.
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.