Section 8 Fair Market Rent (FMR) for ZIP 42701 - 2027

Investment Score for ZIP 42701

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	$930
1 Bedroom	$930
2 Bedrooms	$1,170
3 Bedrooms	$1,620
4 Bedrooms	$1,960
5 Bedrooms	$2,274
6 Bedrooms	$2,547
7 Bedrooms	$2,751
8 Bedrooms	$2,889

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	$930	$126,076	0.74%	D
2BR	$1,170	$174,710	0.67%	D
3BR	$1,620	$266,355	0.61%	D
4BR	$1,960	$367,794	0.53%	F
5BR	$2,274	$494,777	0.46%	F

Demographics & Housing Statistics

U.S. Census Bureau data (2024)

### Market Analysis for ZIP Code 42701 (Elizabethtown, KY) #### Section 8 Voucher Dynamics The Fair Market Rent (FMR) for ZIP code 42701, as determined by HUD for 2026, is set at $1160 for a two-bedroom unit. This amount represents 20.0% of the median household income in Elizabethtown, which is $69,619. However, the actual rental market in this area significantly exceeds these figures. The Zillow median price for a two-bedroom home is $173,825, indicating that the average rent for such units is likely much higher than the FMR. Given the price-to-FMR ratio of 12.5x, it suggests that the typical rent for a two-bedroom unit could be around $14,500 annually, or approximately $1208 per month. This means that tenants using Section 8 vouchers would face significant constraints in finding suitable housing. The maximum allowable rent under the voucher program is capped at the FMR, making it difficult for voucher holders to secure two-bedroom units without substantial out-of-pocket expenses. For instance, if a tenant were to find a two-bedroom unit renting at the Zillow median rate, they would need to pay the difference between the FMR ($1160) and the actual rent ($1208), which comes to $48 per month. This additional cost can be prohibitive for low-income families who rely on the voucher program. #### Affordability & Renter Profile Elizabethtown has a population of 53,987, with 38.4% of residents being renters. This indicates a moderately high demand for rental properties. The occupancy rate stands at 94.0%, suggesting that the rental market is relatively tight, with few vacancies available. The median household income of $69,619 provides some context on the economic conditions of the area, but the high proportion of renters implies that many residents have lower incomes and may struggle with housing affordability. Given that 20.0% of the median income is allocated towards a two-bedroom unit, it becomes clear that a significant portion of the local population faces challenges in affording decent housing. The high price-to-FMR ratio further exacerbates this issue, as it shows that the rental market is far more expensive than what is considered fair market rent. This tight market condition makes it particularly challenging for low-income individuals and families to find affordable housing options, especially those relying on government assistance programs like Section 8. #### Investor Angle From an investor perspective, the ZIP code 42701 presents a mixed picture. While the rental market is robust, with a high occupancy rate and a significant number of renters, the high price-to-FMR ratio poses a challenge. Investors looking to capitalize on Section 8 vouchers must consider whether the rents they can charge will be sufficient to cover their costs and generate a profit. For a two-bedroom unit, the FMR is $1160. If we assume that the typical rental price is around $1208 per month, an investor would need to ensure that their property management costs, mortgage payments, and other expenses do not exceed this figure. Given the high occupancy rate, there is a good chance that the property will remain occupied, but the narrow margin between the FMR and actual rental rates means that any unexpected expenses could quickly erode profitability. In terms of investment grade, the ZIP code appears to be a moderate risk. The strong demand for rentals and the high occupancy rate provide stability, but the high price-to-FMR ratio introduces financial pressure. An investor would need to carefully manage their costs and possibly seek ways to reduce them through efficient property management practices or by securing properties at below-market rates. #### 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, allowing for better alignment with actual rental prices. For example, the FMR for a one-bedroom unit is $930, which is closer to the average rental price in the area. This could help mitigate the financial pressure faced when trying to rent larger units at FMR rates. 2. **Target Affordable Neighborhoods**: Within ZIP code 42701, there might be neighborhoods where rental prices are lower due to factors such as proximity to less desirable areas or lower property values. Identifying and targeting these neighborhoods could allow investors to offer rentals at or near the FMR, thereby attracting more Section 8 voucher holders while still maintaining profitability. 3. **Consider Property Management Efficiency**: To improve cash flow, investors should look into reducing property management costs. This could involve hiring a more efficient property manager, implementing cost-saving measures, or even managing the properties themselves if feasible. Additionally, investing in energy-efficient upgrades can reduce utility costs, which are often passed on to tenants. #### Bottom Line For Section 8-focused investors, the recommendation for ZIP code 42701 is to **Hold**. The area has a strong rental market with high occupancy rates, which bodes well for steady demand. However, the high price-to-FMR ratio makes it challenging to achieve positive cash flow on larger units. Investors should focus on smaller units and target neighborhoods where rental prices are more aligned with the FMR. By doing so, they can maintain profitability while serving the needs of low-income renters who rely on government assistance programs.

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.