Section 8 Fair Market Rent (FMR) for ZIP 42104 - 2027

Investment Score for ZIP 42104

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	$940
1 Bedroom	$1,050
2 Bedrooms	$1,230
3 Bedrooms	$1,480
4 Bedrooms	$2,000
5 Bedrooms	$2,320
6 Bedrooms	$2,598
7 Bedrooms	$2,806
8 Bedrooms	$2,946

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
2BR	$1,230	$189,391	0.65%	D
3BR	$1,480	$291,488	0.51%	F
4BR	$2,000	$400,807	0.5%	F
5BR	$2,320	$548,546	0.42%	F

Demographics & Housing Statistics

U.S. Census Bureau data (2024)

### Market Analysis for ZIP Code 42104 (Bowling Green, KY) #### Section 8 Voucher Dynamics The Fair Market Rent (FMR) for ZIP code 42104 in Bowling Green, KY, for a two-bedroom unit is set at $1190 per month for 2026. This figure represents approximately 19.0% of the median household income in the area, which is $75,164. However, the actual rental prices can be significantly higher, as evidenced by the Zillow median price for a two-bedroom property being $190,369. The price-to-FMR ratio is 13.3x, indicating that the market rent is much higher than the FMR. This discrepancy means that Section 8 voucher holders face significant constraints when trying to find suitable housing. They must locate units that are willing to accept their vouchers and are priced at or below the FMR. Given the high market rent relative to FMR, landlords who accept Section 8 vouchers may have limited options for increasing their rental income, which could affect their willingness to participate in the program. #### Affordability & Renter Profile ZIP code 42104 has a population of 42,076, with 38.3% of residents being renters. This indicates a substantial demand for rental properties in the area. The occupancy rate stands at 95.5%, suggesting that the market is relatively tight, with few vacant units available. Given the median household income of $75,164, the affordability of housing is a critical issue. A two-bedroom unit priced at $1190 would consume about 19.0% of the median income, which is within the range considered affordable. However, the actual market rent is far higher, making it challenging for many residents to afford housing without assistance. The high price-to-FMR ratio further underscores the affordability gap, as it suggests that most rental properties are priced well above the FMR. #### Investor Angle From an investor perspective, the key question is whether the FMR provides a positive cash flow. With the FMR for a two-bedroom unit at $1190, investors need to assess if they can achieve profitability at these rates. The Zillow median price for a two-bedroom property is $190,369, and assuming a typical mortgage rate of around 5%, the monthly mortgage payment would be approximately $1000. Adding in other expenses such as property taxes, insurance, maintenance, and utilities, the total cost could easily exceed $1190, leading to negative cash flow. However, the investment grade of a property depends on several factors, including the potential for appreciation, the stability of the local economy, and the demand for rental properties. Despite the tight market and high occupancy rate, the high price-to-FMR ratio suggests that there is limited room for rental price increases, which could impact long-term profitability. #### Specific Actionable Insights 1. **Focus on Smaller Units**: Given the high price-to-FMR ratio, investors should consider focusing on smaller units such as one-bedroom or studio apartments. These units typically have lower FMRs, and the demand for them is still strong due to the high renter percentage. For example, the FMR for a one-bedroom unit is $1010, which might provide better cash flow opportunities compared to larger units. 2. **Target Affordable Neighborhoods**: Within ZIP code 42104, there may be pockets where rental prices are closer to the FMR. Investors should conduct detailed neighborhood analyses to identify areas where the actual rent is lower, thus providing a better chance for positive cash flow. Additionally, targeting neighborhoods with lower property values could reduce acquisition costs and improve overall investment returns. 3. **Consider Property Enhancements**: To attract Section 8 tenants, investors might need to enhance the quality of their properties to meet the program’s requirements. This could include improvements in amenities, safety features, and overall condition. While these enhancements come with additional costs, they can help secure long-term tenants and potentially increase rental income through higher FMR allowances for improved units. #### Bottom Line For Section 8-focused investors, the recommendation for ZIP code 42104 is to **Skip** this market. The high price-to-FMR ratio and the tight rental market make it challenging to achieve positive cash flow. Additionally, the limited room for rental price increases and the high acquisition costs suggest that the investment risk outweighs the potential rewards. Investors should look for markets with lower price-to-FMR ratios and more favorable conditions for positive cash flow.

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.