Section 8 Fair Market Rent (FMR) for ZIP 42240 - 2027

Investment Score for ZIP 42240

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	$990
1 Bedroom	$990
2 Bedrooms	$1,220
3 Bedrooms	$1,690
4 Bedrooms	$2,040
5 Bedrooms	$2,366
6 Bedrooms	$2,650
7 Bedrooms	$2,862
8 Bedrooms	$3,005

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	$990	$64,235	1.54%	A+
2BR	$1,220	$117,949	1.03%	B
3BR	$1,690	$210,324	0.8%	C
4BR	$2,040	$298,923	0.68%	D
5BR	$2,366	$386,327	0.61%	D

Demographics & Housing Statistics

U.S. Census Bureau data (2024)

### Market Analysis for ZIP Code 42240 (Hopkinsville, KY) #### Section 8 Voucher Dynamics The Fair Market Rent (FMR) for ZIP code 42240, as per the 2026 estimates, is set at $1190 for a two-bedroom unit. This figure represents the maximum amount that a Section 8 voucher holder can pay towards rent. However, it is important to note that the actual rental rates in the area could be higher or lower than these estimates. For instance, the Zillow median price for a two-bedroom home is $118,670, which suggests that the median value of homes in this ZIP code is significantly higher than the FMR. Given that the FMR for a two-bedroom unit is only 27.7% of the median household income ($51,534), there is a notable constraint for voucher holders. They must ensure that their total housing costs do not exceed 30% of their income, which means they have limited flexibility when choosing where to live. The FMR for a three-bedroom unit is $1650, and for a four-bedroom unit, it is $2000. These figures are critical for understanding the affordability threshold for voucher holders in different unit sizes. #### Affordability & Renter Profile In ZIP code 42240, 46.8% of the population are renters, indicating a significant demand for rental properties. With an occupancy rate of 87.8%, the market appears to be relatively tight, suggesting that there is little excess capacity in the rental market. This high demand and low vacancy rate mean that landlords have some leverage in setting rental prices, but they must also be mindful of the FMR limits imposed by the government. The median household income of $51,534 provides insight into the economic profile of potential tenants. Given that 27.7% of this income goes towards a two-bedroom unit at FMR, it is clear that many residents are living on a tight budget. This makes the availability of affordable housing crucial for maintaining a stable tenant base. #### Investor Angle From an investor’s perspective, the ZIP code 42240 offers a mixed picture. The price-to-FMR ratio of 8.3x indicates that the median home value is much higher than the FMR for a two-bedroom unit. This suggests that the rental market is likely to be competitive, with landlords needing to balance between attracting tenants and adhering to FMR guidelines. To determine if this ZIP code is cash-flow positive at FMR, we need to consider the typical expenses associated with owning and managing rental properties. Assuming a conservative estimate of monthly expenses including mortgage payments, property taxes, insurance, maintenance, and other miscellaneous costs, a landlord would need to ensure that the rental income covers these expenses. For example, if a two-bedroom unit is rented at the FMR of $1190, and the monthly expenses (excluding mortgage) are around $400, then the net cash flow would be $790 per month. This is a positive cash flow, but it is essential to factor in the mortgage payment, which can vary depending on the purchase price and interest rate. If the mortgage payment is less than $790, then the property would be cash-flow positive. The investment grade for this ZIP code can be assessed based on several factors, including the demand for rental units, the stability of the local economy, and the regulatory environment. Given the high percentage of renters and the relatively tight market, the investment grade is moderate to good. However, the high price-to-FMR ratio could pose challenges for investors who are relying solely on FMR to cover their expenses. #### Specific Actionable Insights 1. **Focus on Two-Bedroom Units**: Given that the FMR for a two-bedroom unit is $1190, which is close to the Zillow median price of $118,670, investing in two-bedroom units could provide a better chance of achieving cash-flow positivity. Landlords should aim to keep the rental rates just below the FMR limit to attract voucher holders while ensuring profitability. 2. **Consider Location and Amenities**: Since the rental market is tight, investors should focus on properties that offer desirable amenities and are located in convenient areas. This could include proximity to public transportation, schools, and employment centers. Properties with these attributes are more likely to be in demand and can command slightly higher rents without exceeding FMR limits. 3. **Monitor Local Economic Indicators**: The median household income of $51,534 is a key indicator of the overall economic health of the area. Investors should keep an eye on any changes in this figure, as well as employment trends and other economic indicators, to gauge the long-term sustainability of the rental market. #### Bottom Line For Section 8-focused investors, ZIP code 42240 presents a moderately attractive opportunity. The high demand for rental properties and the relatively tight market suggest that there is a strong likelihood of finding tenants. However, the high price-to-FMR ratio means that investors need to be cautious about the purchase price and ensure that they can achieve cash-flow positivity through efficient management and strategic pricing. **Recommendation**: **Buy**. Despite the challenges posed by the high price-to-FMR ratio, the strong rental demand and the potential for cash-flow positive investments make this ZIP code worth considering for investors who are willing to manage their properties effectively and adhere to FMR guidelines.

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.