Section 8 Fair Market Rent (FMR) for ZIP 46227 - 2027

Investment Score for ZIP 46227

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	$1,060
1 Bedroom	$1,190
2 Bedrooms	$1,370
3 Bedrooms	$1,780
4 Bedrooms	$2,160
5 Bedrooms	$2,506
6 Bedrooms	$2,807
7 Bedrooms	$3,032
8 Bedrooms	$3,184

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	$1,190	$120,669	0.99%	C
2BR	$1,370	$172,351	0.79%	D
3BR	$1,780	$234,351	0.76%	D
4BR	$2,160	$275,837	0.78%	D
5BR	$2,506	$318,318	0.79%	D

Demographics & Housing Statistics

U.S. Census Bureau data (2024)

### Market Analysis for ZIP Code 46227 (Indianapolis, IN) #### Section 8 Voucher Dynamics The Fair Market Rent (FMR) for ZIP code 46227 is set by HUD for 2026. For a two-bedroom unit, the FMR is $1320, which represents 29.5% of the median household income of $53,629. This suggests that the rent is relatively affordable compared to the income levels in the area. However, the actual market rent for a two-bedroom unit on Zillow is $170,901, which translates to a monthly rent of approximately $1424 when considering a typical mortgage payment scenario. The price-to-FMR ratio is 10.8x, indicating that market rents are significantly higher than the FMR. This means that tenants using Section 8 vouchers would face constraints in finding units that are within the FMR limits. Landlords who accept Section 8 vouchers must ensure their rental rates do not exceed the FMR, which could limit their ability to compete with non-voucher properties in terms of pricing. Consequently, voucher holders might struggle to find suitable housing options, especially in a competitive market like Indianapolis. #### Affordability & Renter Profile ZIP 46227 has a high renter population percentage of 55.1%, suggesting that a significant portion of the residents are renters rather than homeowners. With a median household income of $53,629, the affordability of housing becomes a critical issue. The occupancy rate of 90.8% indicates that the housing stock is mostly occupied, implying a tight market where demand outstrips supply. This tightness can lead to upward pressure on rents, making it even harder for low-income households to find affordable housing. Given the high renter population and the tight market conditions, it is likely that many renters are cost-burdened, spending a disproportionate amount of their income on housing. The FMR for a two-bedroom unit being $1320, while the actual market rent is around $1424, highlights the challenge of finding affordable housing within the voucher program’s limits. The median income level also suggests that many residents are in the lower to middle-income brackets, further emphasizing the need for affordable housing solutions. #### Investor Angle From an investor perspective, the ZIP code 46227 presents both opportunities and challenges. The FMR for a two-bedroom unit is $1320, but the actual market rent is closer to $1424. This difference means that landlords accepting Section 8 vouchers will have to operate at a lower rent rate than the market average, potentially impacting cash flow. However, the high renter population and occupancy rate suggest a stable demand for rental properties, which can be beneficial for long-term investments. To assess the investment grade, we need to consider the potential for positive cash flow. If a landlord can secure a property at a price that aligns with the FMR, they could achieve a positive cash flow. However, given the price-to-FMR ratio of 10.8x, it is unlikely that properties will be purchased at FMR levels. Instead, investors should focus on properties that offer a balance between market rents and FMR rates, ensuring that they can still attract tenants while maintaining profitability. #### Specific Actionable Insights 1. **Focus on Units Below FMR**: Investors should seek out properties where the rent is below the FMR of $1320 for a two-bedroom unit. This strategy allows them to attract Section 8 voucher holders without sacrificing too much on rental income. Properties priced at or slightly above $1320 might still be viable if they offer additional amenities or are in highly desirable locations. 2. **Consider Smaller Units**: Given the high price-to-FMR ratio, smaller units such as one-bedroom apartments might be more attractive to voucher holders. The FMR for a one-bedroom unit is $1140, which is significantly lower than the market rent. By focusing on smaller units, investors can cater to a broader range of tenants and potentially achieve better occupancy rates. 3. **Target Areas with Lower Market Rents**: While the overall market rent is high, there may be pockets within ZIP 46227 where rents are closer to the FMR. Investors should conduct detailed neighborhood analyses to identify these areas and target their investments accordingly. This approach can help mitigate the risk of operating below market rates. #### Bottom Line For Section 8-focused investors, ZIP code 46227 presents a mixed picture. On one hand, the high renter population and occupancy rate indicate strong demand for rental properties. On the other hand, the significant gap between FMR and market rents poses challenges for achieving positive cash flow. **Recommendation**: **Hold**. Investors should maintain their current positions in this ZIP code but be cautious about new acquisitions. Existing properties that are already aligned with FMR rates can continue to provide steady returns, especially if they are well-managed and located in areas with lower market rents. However, new investments should be carefully evaluated to ensure they offer a reasonable balance between market rents and FMR rates.

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.