Section 8 Fair Market Rent (FMR) for ZIP 46237 - 2027

Investment Score for ZIP 46237

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	$1,340
1 Bedroom	$1,500
2 Bedrooms	$1,730
3 Bedrooms	$2,240
4 Bedrooms	$2,730
5 Bedrooms	$3,167
6 Bedrooms	$3,547
7 Bedrooms	$3,831
8 Bedrooms	$4,023

Investment Analysis by Bedroom Size

Zillow median home prices vs Section 8 FMR rates (Data: 2026-07-31)

Bedrooms	Monthly FMR	Median Price	1% Rule	Grade
2BR	$1,730	$201,429	0.86%	C
3BR	$2,240	$252,596	0.89%	C
4BR	$2,730	$327,932	0.83%	C
5BR	$3,167	$430,363	0.74%	D

Demographics & Housing Statistics

U.S. Census Bureau data (2024)

Market Analysis for ZIP Code 46237 (Indianapolis, IN) 1. **Section 8 Voucher Dynamics** The Fair Market Rent (FMR) for ZIP code 46237, as per the 2026 data, is set at $1620 for a two-bedroom unit. This amount represents 24.6% of the median household income of $79,078 in the area. The FMR is designed to ensure that rental units are affordable for low-income families who receive Section 8 vouchers. However, it is important to understand how these FMRs compare to actual rents in the market. Actual rents can vary significantly from the FMR. For instance, the Zillow median price for a two-bedroom home in ZIP 46237 is $198,435, which translates into a monthly mortgage payment of approximately $1,000 based on typical financing terms. This suggests that landlords might be able to charge higher rents to cover their costs, especially if they are not relying solely on rental income but also on appreciation of property values. Constraints for voucher holders include the fact that they may struggle to find landlords willing to accept Section 8 vouchers due to the perception of additional administrative burden. Additionally, the FMR may not always align with the actual market rent, leading to situations where voucher holders cannot afford the difference between the FMR and the actual rent charged by landlords. 2. **Affordability & Renter Profile** ZIP code 46237 has a population of 43,473, with 31.1% of residents being renters. This indicates a significant demand for rental properties in the area. The occupancy rate of 97.2% suggests that the market is relatively tight, with very few vacant units available. Given the median household income of $79,078, the FMR for a two-bedroom unit at $1620 is indeed affordable, representing only 24.6% of the median income. However, the high price-to-FMR ratio of 10.2x implies that property values are significantly higher than what the FMR would suggest is a reasonable rent. This could indicate that there is a premium on housing in the area, possibly due to desirable amenities or proximity to employment centers. 3. **Investor Angle** From an investor’s perspective, the key question is whether the FMR allows for a positive cash flow when considering the actual market conditions. Given the Zillow median price of $198,435 for a two-bedroom home, and assuming a typical mortgage rate of 4%, the monthly mortgage payment would be around $1,000. Adding in other expenses such as property taxes, insurance, maintenance, and utilities, the total cost of ownership could easily exceed $1,620. This means that even charging the FMR of $1620 for a two-bedroom unit, landlords might still face financial challenges unless they can leverage other sources of income or appreciate the value of their properties over time. The investment grade for this ZIP code would likely be moderate, given the tight market and the potential for rental income to fall short of covering all expenses. 4. **Specific Actionable Insights** - **Rent Premium Strategy**: Landlords should consider charging a premium above the FMR for non-voucher tenants. If the market rent is significantly higher than the FMR, they can attract tenants willing to pay more, thereby improving their cash flow. For example, charging $1,800-$2,000 for a two-bedroom unit could help cover the mortgage and other expenses. - **Property Value Appreciation**: Investors should focus on properties that have the potential for value appreciation. Given the high price-to-FMR ratio, there is a strong likelihood that property values will continue to rise, providing a solid return on investment over the long term. - **Tenant Screening**: Implementing rigorous tenant screening processes can help mitigate the risks associated with accepting Section 8 vouchers. Ensuring that tenants have a good rental history and stable income can reduce the likelihood of default or damage to the property. 5. **Bottom Line Recommendation** For Section 8-focused investors, the recommendation is to **Hold**. While the FMR is lower than the actual market rent, the tight market and high occupancy rates indicate that there is a steady demand for rental properties. However, investors should be prepared to manage the financial constraints and administrative burdens associated with Section 8 vouchers. Additionally, focusing on properties with strong potential for value appreciation can provide a more balanced approach to achieving a positive return on investment. In summary, ZIP code 46237 presents a challenging yet potentially rewarding environment for Section 8-focused real estate investments. The high occupancy rates and demand for rental properties suggest stability, but the need to balance FMR with actual market conditions requires careful planning and management.

Data Sources: FMR data from HUD (2027). Median home prices from Zillow (2026-07-31). 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.