Section 8 Fair Market Rent (FMR) for ZIP 40601 - 2027

Investment Score for ZIP 40601

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	$820
1 Bedroom	$940
2 Bedrooms	$1,180
3 Bedrooms	$1,510
4 Bedrooms	$1,870
5 Bedrooms	$2,169
6 Bedrooms	$2,429
7 Bedrooms	$2,623
8 Bedrooms	$2,754

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
1BR	$940	$107,219	0.88%	C
2BR	$1,180	$187,216	0.63%	D
3BR	$1,510	$253,432	0.6%	F
4BR	$1,870	$336,735	0.56%	F
5BR	$2,169	$426,731	0.51%	F

Demographics & Housing Statistics

U.S. Census Bureau data (2024)

### Market Analysis for ZIP Code 40601 (Frankfort, KY) #### Section 8 Voucher Dynamics The Fair Market Rent (FMR) figures for ZIP code 40601 (Frankfort, KY) in 2026 indicate that the rent for a two-bedroom apartment is set at $1,090. This figure represents 19.9% of the median household income in the area, which is $65,732. The FMRs are designed to ensure that housing costs do not exceed a reasonable percentage of income for low-income households. However, it is important to understand how these FMRs compare to actual rents in the market. According to Zillow, the median price for a two-bedroom home in Frankfort is $181,044. This suggests that the rental market is significantly below the median home value, indicating that there might be a strong demand for rental properties. The price-to-FMR ratio of 13.8x implies that the median home value is about 13.8 times higher than the median rent for a two-bedroom unit. This high ratio could suggest that the rental market is relatively affordable compared to the overall housing market. However, the actual rents in the market may be higher than the FMRs. For instance, if the average rent for a two-bedroom unit exceeds $1,090, Section 8 voucher holders would face significant constraints in finding suitable housing. They would only be able to afford units priced at or below the FMR, which could limit their options. #### Affordability & Renter Profile ZIP code 40601 has a population of 51,893, with 35.3% of residents being renters. This indicates a substantial rental market, but also highlights the importance of affordability for a significant portion of the population. Given that the occupancy rate is 94.0%, it suggests that the market is fairly tight, with most available units being occupied. The median household income of $65,732 provides context for the economic profile of the area. A two-bedroom apartment priced at $1,090 would consume 19.9% of the median income, which is a reasonable amount according to HUD guidelines. However, this still leaves a significant portion of the income for other expenses, such as utilities, food, and healthcare. Given the high occupancy rate and the substantial number of renters, the market appears to be tight. This means that there is likely a competitive environment for rental properties, with landlords having some leverage over pricing. However, the FMRs serve as a cap for what voucher holders can pay, which could create a bifurcated market where some units are priced at or below FMR, while others command higher rents due to the strong demand. #### Investor Angle From an investor's perspective, the key question is whether the rental market at FMR levels is cash-flow positive. Based on the provided data, the FMR for a two-bedroom unit is $1,090. To determine if this is cash-flow positive, we need to consider the typical operating expenses associated with rental properties, including maintenance, property taxes, insurance, and utilities. Assuming a conservative estimate of 50% of the rent going towards expenses, an investor would net approximately $545 per month from a two-bedroom unit. This is a gross simplification, but it gives us a starting point. If the expenses are lower, the net cash flow would be higher. Conversely, if the expenses are higher, the net cash flow would be lower. The investment grade of a property depends on various factors, including the location, condition, and demand. Given the high occupancy rate and the substantial number of renters, the demand for rental properties seems robust. However, the tightness of the market and the potential for higher-than-FMR rents could mean that properties priced at FMR might struggle to compete with higher-priced units. #### Specific Actionable Insights 1. **Focus on Units Below FMR**: Investors should consider acquiring properties that are currently priced below the FMR levels. For example, a two-bedroom unit priced at $1,000 or less would be attractive to voucher holders and potentially offer better cash flow. This strategy leverages the strong demand for affordable housing without exceeding the FMR cap. 2. **Target Properties with Low Operating Costs**: To maximize cash flow, investors should target properties with low operating costs. This could include well-maintained homes with minimal repair needs, or areas with lower property taxes and insurance rates. For instance, if the operating costs can be kept under 40% of the rent, the net cash flow from a two-bedroom unit priced at $1,090 would be around $654 per month. 3. **Consider Multi-Family Properties**: Given the high occupancy rate and the substantial number of renters, multi-family properties could be particularly attractive. These properties allow for economies of scale, reducing the per-unit cost and potentially increasing cash flow. Additionally, multi-family properties often have higher turnover rates, which can help maintain a steady stream of tenants. #### Bottom Line For Section 8-focused investors, the recommendation for ZIP code 40601 is to **Buy** properties that are priced below the FMR levels, especially those with low operating costs. The strong demand for rental properties and the high occupancy rate make this a favorable market for affordable housing investments. However, investors must be cautious about the potential for higher-than-FMR rents in a tight market, which could limit the pool of eligible tenants. In summary, ZIP code 40601 presents a solid opportunity for investors looking to capitalize on the demand for affordable housing, particularly through the acquisition of properties that align with FMR guidelines and have manageable operating costs.

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.