Location: Indianapolis-Carmel, IN | Metro: Indianapolis-Carmel, IN HUD Metro FMR Area
Based on 1% Rule: A+ (≥1.5%) | A (≥1.2%) | B (≥1.0%) | C (≥0.8%) | D (≥0.6%) | F (<0.6%)
| Unit Size | Monthly FMR |
|---|---|
| Studio | $1,010 |
| 1 Bedroom | $1,140 |
| 2 Bedrooms | $1,310 |
| 3 Bedrooms | $1,700 |
| 4 Bedrooms | $2,070 |
| 5 Bedrooms | $2,401 |
| 6 Bedrooms | $2,689 |
| 7 Bedrooms | $2,904 |
| 8 Bedrooms | $3,049 |
Zillow median home prices vs Section 8 FMR rates (Data: 2026-08-31)
| Bedrooms | Monthly FMR | Median Price | 1% Rule | Grade |
|---|---|---|---|---|
| 1BR | $1,140 | $106,106 | 1.07% | B |
| 2BR | $1,310 | $134,833 | 0.97% | C |
| 3BR | $1,700 | $167,504 | 1.01% | B |
| 4BR | $2,070 | $201,968 | 1.02% | B |
| 5BR | $2,401 | $223,287 | 1.08% | B |
U.S. Census Bureau data (2024)
The economics of Section 8 housing in ZIP code 46201, located in Indianapolis, IN, Marion County, are straightforward when analyzed against the financial metrics available. For a two-bedroom apartment, the SAFMR (Small Area Fair Market Rent) for FY 2024 is set at $1220. This figure is specifically tailored for this ZIP code, ensuring it reflects the local rental market conditions accurately.
Local market rent, as measured by ZORI (Zillow Observed Rent Index), stands at $1,198. This indicates that the SAFMR slightly exceeds the average market rent, which can be beneficial for landlords participating in the program. However, it's crucial to understand how the voucher system operates to see the actual economic impact.
A Section 8 voucher pays the difference between the tenant's portion and the SAFMR, up to the limit of $1220. The tenant's portion is generally 30% of their adjusted income, but it cannot exceed the lower of either 30% of the household's monthly adjusted income or the applicable payment standard, which is the SAFMR in this case. Utility allowances are also factored into the reimbursement but do not directly affect the rent calculation.
To illustrate, if a tenant has an adjusted income of $1,000 per month, their contribution towards rent would be $300. Assuming the landlord charges the SAFMR rate of $1220, the government would cover the remaining $920, making the total rent collected $1220. If the market rent is below the SAFMR, such as the $1,198 ZORI, the government would still reimburse up to $1220, meaning the landlord could charge the higher SAFMR rate without losing tenants.
In ZIP 46201, landlords typically receive a reimbursement that matches the SAFMR, thus closing any gap between the market rate and the SAFMR. In this scenario, since the SAFMR is higher than the ZORI, there is a surplus. Landlords can expect to earn approximately $22 more per unit than the local market average, which translates to a surplus of $264 annually per two-bedroom unit.
This surplus provides a buffer against potential market fluctuations and ensures landlords are adequately compensated for renting to low-income families. It's important to note that while this analysis focuses on the financial aspects, compliance with HUD regulations and maintaining the property to acceptable standards are also critical components of being a Section 8 landlord.
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.