Section 8 Fair Market Rent (FMR) for ZIP 42301 - 2027

Investment Score for ZIP 42301

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	$900
1 Bedroom	$910
2 Bedrooms	$1,190
3 Bedrooms	$1,580
4 Bedrooms	$1,590
5 Bedrooms	$1,844
6 Bedrooms	$2,065
7 Bedrooms	$2,230
8 Bedrooms	$2,342

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	$910	$74,737	1.22%	A
2BR	$1,190	$136,167	0.87%	C
3BR	$1,580	$209,748	0.75%	D
4BR	$1,590	$301,678	0.53%	F
5BR	$1,844	$377,405	0.49%	F

Demographics & Housing Statistics

U.S. Census Bureau data (2024)

### Market Analysis for ZIP Code 42301 (Owensboro, KY) #### Section 8 Voucher Dynamics The Fair Market Rent (FMR) for ZIP code 42301 in Owensboro, KY, is set by HUD for 2026. For a two-bedroom unit, the FMR is $1170, which represents approximately 21.0% of the median household income in the area. This indicates that the rent is relatively affordable for the average resident. 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 ZIP 42301 is $132,141. The price-to-FMR ratio is 9.4x, meaning that the median price of a home is nearly nine times higher than the FMR for a two-bedroom rental unit. This suggests that while the FMR is designed to reflect the typical rent for a given area, actual rents may be significantly higher. For voucher holders, this means they might face challenges finding units that accept their vouchers due to the discrepancy between FMR and market rents. #### Affordability & Renter Profile ZIP 42301 has a population of 45,445, with 37.0% of residents being renters. This indicates a substantial rental market, but also a significant portion of the population owning homes. The occupancy rate is 93.0%, suggesting that the housing stock is mostly occupied, leaving little room for new rentals to enter the market without displacing existing tenants. Given the median household income of $66,885, the affordability of a $1170 monthly rent for a two-bedroom unit is reasonable, as it represents only 21.0% of the median income. However, the high price-to-FMR ratio implies that many properties may be priced above the FMR, making them less accessible to voucher holders. The tight market conditions could lead to increased competition among renters, particularly those relying on Section 8 vouchers. #### Investor Angle From an investor’s perspective, the ZIP code offers a mixed picture. The FMR for a two-bedroom unit is $1170, which is significantly lower than the median home price of $132,141. Given the high price-to-FMR ratio, it is likely that many properties are priced above the FMR, which could limit the pool of potential tenants who can afford to live there using Section 8 vouchers. To determine if the ZIP is cash-flow positive at FMR, we need to consider the typical expenses associated with rental properties. These include mortgage payments, property taxes, insurance, maintenance, and other operational costs. If an investor purchases a property at the median price of $132,141 and rents it out at the FMR of $1170, the cash flow will depend heavily on the mortgage terms and other expenses. Assuming a 30-year fixed-rate mortgage at 5.0% interest, the monthly payment would be around $700, leaving about $470 per month for other expenses and profit. However, this assumes no down payment, which is unlikely for most investors. With a 20% down payment, the mortgage payment would be closer to $560, reducing the net cash flow to around $610 per month. The investment grade for this ZIP code would be moderate. While the demand for rental properties is strong, the high price-to-FMR ratio suggests that many properties may not be suitable for Section 8 tenants. Investors should carefully evaluate the local market dynamics and ensure that their properties are priced competitively to attract voucher holders. #### Specific Actionable Insights 1. **Target Lower-Rent Properties**: Investors should focus on acquiring properties that are priced close to or below the FMR. For instance, a two-bedroom unit priced at $1170 or less would be more attractive to voucher holders and could provide better cash flow. 2. **Consider Smaller Units**: Since the FMR for one-bedroom units is the same as for zero-bedroom units ($890), investing in smaller units could be a viable strategy. This would allow investors to potentially capture a larger share of the rental market, especially if they can offer amenities that make their units more appealing. 3. **Engage with Local Real Estate Agents**: To navigate the complexities of the local rental market, investors should work closely with local real estate agents who have experience with Section 8 properties. They can provide valuable insights into which areas are more likely to accept vouchers and help manage the process of attracting and retaining tenants. #### Bottom Line For Section 8-focused investors, the ZIP code 42301 presents a challenging yet potentially rewarding market. The high price-to-FMR ratio and strong occupancy rates suggest that while there is demand for rental properties, the market is tight and may require strategic planning to succeed. **Recommendation**: **Hold**. Investors should proceed cautiously, targeting properties that are priced close to the FMR and focusing on smaller units. Engaging with local real estate professionals will be crucial to understanding the nuances of the market and ensuring successful tenancy. This ZIP code is worth considering for investors who are willing to adapt their strategies to the local market conditions and are prepared to work closely with tenants and local authorities to manage their properties effectively.

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.