Section 8 Fair Market Rent (FMR) for ZIP 46226 - 2027

Investment Score for ZIP 46226

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	$1,110
1 Bedroom	$1,250
2 Bedrooms	$1,440
3 Bedrooms	$1,870
4 Bedrooms	$2,270
5 Bedrooms	$2,633
6 Bedrooms	$2,949
7 Bedrooms	$3,185
8 Bedrooms	$3,344

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	$1,440	$141,452	1.02%	B
3BR	$1,870	$161,767	1.16%	B
4BR	$2,270	$196,336	1.16%	B
5BR	$2,633	$294,697	0.89%	C

Demographics & Housing Statistics

U.S. Census Bureau data (2024)

### Market Analysis for ZIP Code 46226 (Indianapolis, IN) #### Section 8 Voucher Dynamics The Fair Market Rent (FMR) for ZIP code 46226 in Indianapolis, Indiana, for a two-bedroom unit is set at $1340 per month for 2026. This represents approximately 32.0% of the median household income of $50,325 in the area. However, the actual rent for a two-bedroom unit in this ZIP code is significantly higher, with Zillow reporting a median price of $140,996. This translates to a price-to-FMR ratio of 8.8x, indicating that the actual rental costs are much higher than the FMR. Given the high price-to-FMR ratio, Section 8 voucher holders face significant constraints. The maximum allowable rent under the voucher program is capped at the FMR, meaning that voucher holders would struggle to find affordable housing options that fit within their budget. For instance, a tenant with a Section 8 voucher would only be able to afford units renting for up to $1340 per month, which is far below the actual market rates. #### Affordability & Renter Profile ZIP code 46226 has a population of 47,099, with 53.8% of residents being renters. This indicates a strong demand for rental properties in the area. The occupancy rate stands at 91.9%, suggesting that the rental market is relatively tight. Given that a majority of residents are renters and the occupancy rate is high, it is clear that there is a significant need for affordable housing options. However, the affordability gap is stark. With the median household income at $50,325, the actual median rent for a two-bedroom unit ($140,996) is not only above the FMR but also represents a substantial portion of the average resident’s income. This makes it challenging for many residents to find suitable housing without financial assistance. #### Investor Angle From an investor perspective, the ZIP code 46226 presents mixed opportunities. The FMR for a two-bedroom unit is $1340, which is lower than the actual market rent. However, the high price-to-FMR ratio means that properties rented at FMR levels will likely not generate sufficient cash flow to cover expenses and provide a profit margin. To determine the investment grade, we must consider the potential returns versus the risks. The high occupancy rate suggests that there is a steady demand for rental properties, which can be beneficial. However, the tight market and high actual rents indicate that there is a risk of vacancy if the property is priced at the FMR level. Investors should carefully evaluate the local market dynamics and consider the possibility of targeting other segments of the rental market, such as those who might pay slightly above FMR but still require some form of subsidy. #### Specific Actionable Insights 1. **Target Properties Below Actual Market Rates**: Given the high price-to-FMR ratio, investors should focus on acquiring properties that can be rented at rates slightly below the actual market rate but still above the FMR. For example, a two-bedroom unit could be priced at around $1350-$1400 per month, which is just above the FMR but still within reach for some tenants who might not qualify for full Section 8 vouchers. This approach balances the need for affordability with the requirement for positive cash flow. 2. **Consider Mixed-Income Developments**: To mitigate the risk of vacancy and ensure a steady stream of tenants, investors might consider developing mixed-income properties. This strategy involves setting aside a portion of units for low-income residents who use Section 8 vouchers while renting the remaining units at market rates. This diversification can help stabilize the overall financial performance of the property. 3. **Engage with Local Housing Authorities**: Investors should engage with local housing authorities to understand the availability and distribution of Section 8 vouchers. This can provide valuable insights into the number of potential tenants and the likelihood of securing long-term leases. Additionally, partnerships with housing authorities can sometimes lead to additional subsidies or incentives for properties that cater to low-income families. #### Bottom Line For Section 8-focused investors, ZIP code 46226 presents a challenging environment due to the high price-to-FMR ratio and the tight rental market. While there is a significant demand for rental properties, the actual rents are substantially higher than the FMR, making it difficult to achieve positive cash flow when renting exclusively to voucher holders. **Recommendation**: **Skip**. The high actual rents relative to the FMR make it unlikely that investors can achieve positive cash flow by focusing solely on Section 8 tenants. Instead, investors might want to consider other ZIP codes where the price-to-FMR ratio is closer to the national average, or explore alternative strategies such as mixed-income developments. This analysis is based on the provided data and does not account for any external factors that may influence the market. Investors should conduct further research and consult with local real estate professionals before making any investment decisions.

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.