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 | $1,040 |
| 1 Bedroom | $1,270 |
| 2 Bedrooms | $1,490 |
| 3 Bedrooms | $2,050 |
| 4 Bedrooms | $2,220 |
| 5 Bedrooms | $2,575 |
| 6 Bedrooms | $2,884 |
| 7 Bedrooms | $3,115 |
| 8 Bedrooms | $3,271 |
Zillow median home prices vs Section 8 FMR rates (Data: 2026-08-31)
| Bedrooms | Monthly FMR | Median Price | 1% Rule | Grade |
|---|---|---|---|---|
| 2BR | $1,490 | $210,584 | 0.71% | D |
| 3BR | $2,050 | $266,804 | 0.77% | D |
| 4BR | $2,220 | $319,060 | 0.7% | D |
| 5BR | $2,575 | $341,423 | 0.75% | D |
U.S. Census Bureau data (2024)
The analysis of ZIP code 40517 in Lexington, KY, reveals key insights for landlords and small-portfolio investors considering investment in this area.
The rent math does not align favorably. The Fair Market Rent (FMR) for the zip code in fiscal year 2024 is set at $1230, which is below the market rent indicated by the Zillow Observed Rent Index (ZORI) at $1,313. This suggests that landlords participating in the Section 8 program would be renting properties at a rate lower than the current market average, potentially leading to financial inefficiencies.
Acquisition in this area is relatively affordable. With a median home value of $253,532, the cost of entry into the real estate market is moderate. Additionally, the average days on market (DOM) is only 16 days, indicating a quick turnaround time for sales. The low price-cut share of 0.2% further supports the idea that homes are selling close to their asking prices, making this an attractive area for acquisition without the need for significant price adjustments.
Tenant demand is strong in ZIP 40517. The population stands at 35,656, with a substantial 64.3% of residents being renters. This high renter share suggests a robust pool of potential tenants, ensuring that rental units are likely to be occupied quickly and consistently.
In conclusion, while the rent math under the Section 8 program does not work in favor of landlords due to the discrepancy between the FMR and market rent, the area remains attractive for acquisition with its moderate home values and strong tenant demand. Landlords should consider supplementing their portfolio with market-rate rentals to balance the financial impact of participating in the Section 8 program.
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.