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 | $860 |
| 1 Bedroom | $1,050 |
| 2 Bedrooms | $1,230 |
| 3 Bedrooms | $1,690 |
| 4 Bedrooms | $1,830 |
| 5 Bedrooms | $2,123 |
| 6 Bedrooms | $2,378 |
| 7 Bedrooms | $2,568 |
| 8 Bedrooms | $2,696 |
Zillow median home prices vs Section 8 FMR rates (Data: 2026-08-31)
| Bedrooms | Monthly FMR | Median Price | 1% Rule | Grade |
|---|---|---|---|---|
| 1BR | $1,050 | $261,376 | 0.4% | F |
| 2BR | $1,230 | $450,609 | 0.27% | F |
U.S. Census Bureau data (2024)
ZIP code 40507, located in Lexington, KY, is situated within the Lexington-Fayette, KY MSA. Its Fair Market Rent (FMR) for FY 2024 is set at $1100, which is notably lower than the market rent of $1,714. This indicates that 40507 offers rental units at a discount compared to what the market would typically charge, making it an attractive area for Section 8 participants who are seeking affordable housing options.
The median home value in ZIP 40507 stands at $392,436, which is representative of the overall home values in the Lexington-Fayette MSA. However, the renter share of 75.8% is significantly higher than the average for the MSA, suggesting a strong demand for rentals in this area. This high renter share combined with below-market rents points towards 40507 being a sweet spot for Section 8 properties, where a large portion of residents are likely to be renters benefiting from government-subsidized housing programs.
Comparatively, other ZIP codes within the Lexington-Fayette MSA might have similar home values but a lower renter share, indicating a mix of homeowners and renters. In contrast, ZIP 40507 leans heavily towards being a rental-focused area, particularly appealing to those eligible for Section 8 assistance due to its lower FMR compared to the market rent. This positioning makes 40507 a value pocket within the larger metro area, offering landlords and small-portfolio investors opportunities to serve a substantial tenant base while adhering to the affordability standards set by the Section 8 program.
To summarize, ZIP 40507 presents itself as a valuable rental market within the Lexington-Fayette MSA, characterized by a significant renter population and rental rates that are more affordable than the prevailing market conditions. This combination suggests a strong alignment with the goals of the Section 8 program, potentially making it a prime location for such investments.
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.