Section 8 Fair Market Rent (FMR) for ZIP 46254 - 2027

Investment Score for ZIP 46254

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
2BR	$1,370	$177,910	0.77%	D
3BR	$1,780	$229,211	0.78%	D
4BR	$2,160	$274,650	0.79%	D
5BR	$2,506	$403,652	0.62%	D

Demographics & Housing Statistics

U.S. Census Bureau data (2024)

### Market Analysis for ZIP Code 46254 (Indianapolis, IN) #### Section 8 Voucher Dynamics In ZIP code 46254, the Fair Market Rent (FMR) for a two-bedroom unit is set at $1440 per month for 2026. This figure represents 28.7% of the median household income of $60,287, indicating that it is within the affordability range for many residents. However, the actual rent charged by landlords can vary significantly from the FMR. Given that the price-to-FMR ratio is 10.1 times the Zillow median price for a two-bedroom home ($175,140), it suggests that the median home value is much higher than the FMR. This disparity means that landlords who charge the FMR might be under-renting their properties relative to market values, which could limit their willingness to accept Section 8 vouchers. The constraints for voucher holders include finding landlords willing to accept the voucher amount, which may be lower than the market rate. Additionally, the voucher payment covers only part of the rent if the landlord charges above the FMR. For instance, a three-bedroom unit with an FMR of $1860 would still require the tenant to pay the difference if the actual rent exceeds this amount. This could make it challenging for voucher holders to find suitable housing, especially if they need larger units. #### Affordability & Renter Profile ZIP code 46254 has a population of 40,674, with 50.5% of residents being renters. The occupancy rate stands at 94.1%, indicating a robust demand for rental properties. With half of the population renting, there is a significant segment of the market that relies on affordable housing options. The median household income of $60,287 provides some context for the financial capabilities of residents. A two-bedroom unit priced at $1440 per month would consume approximately 28.7% of the median income, which is generally considered affordable but still represents a substantial portion of monthly earnings. Given the high occupancy rate and the significant percentage of renters, the market appears to be relatively tight. Landlords have the advantage of being able to charge higher rents due to the strong demand. However, the large number of renters also means that there is a considerable need for affordable housing, which could benefit from Section 8 vouchers. #### Investor Angle From an investor perspective, the ZIP code's dynamics provide both opportunities and challenges. The FMR for a two-bedroom unit is $1440, which is significantly lower than the median home value of $175,140. This suggests that investors purchasing homes in this area could potentially achieve positive cash flow if they manage to rent out their properties at or near the FMR. However, the price-to-FMR ratio of 10.1x indicates that the purchase price of homes is much higher than what the FMR would suggest as a reasonable rental rate. This high ratio implies that investors would need to carefully consider their expenses and potential rental income to ensure profitability. If the actual rent charged is close to the FMR, then the investment grade would likely be moderate to low, given the high purchase costs relative to the rental income. To determine the investment grade, we must consider the potential rental income against the cost of ownership. Assuming a mortgage payment of around $800-$900 per month for a property valued at $175,140, plus additional expenses such as property taxes, insurance, maintenance, and utilities, the total monthly cost could easily exceed $1440. Therefore, the investment grade would depend heavily on the ability to rent out the property at rates above the FMR, which may not always be feasible. #### Specific Actionable Insights 1. **Focus on Smaller Units**: Given the high price-to-FMR ratio, investors should focus on smaller units like one-bedroom or studio apartments where the FMR is lower. For example, a one-bedroom unit with an FMR of $1240 would be easier to manage financially compared to a two-bedroom unit with an FMR of $1440. This strategy would help mitigate the risk of negative cash flow. 2. **Consider Multi-Family Properties**: Multi-family properties often offer better economies of scale and can generate higher overall rental income. Investors should look into purchasing multi-family buildings where the combined rental income from multiple units could offset the higher purchase costs. 3. **Negotiate with Landlords**: Since the actual rent charged can be higher than the FMR, investors should negotiate with landlords to ensure they are charging rates that are competitive yet within the bounds of what voucher holders can afford. This negotiation could involve offering incentives or discounts to landlords who agree to accept Section 8 vouchers. #### Bottom Line For Section 8-focused investors, the recommendation for ZIP code 46254 is to **Hold**. While there is a significant demand for rental properties, the high price-to-FMR ratio makes it challenging to achieve positive cash flow without charging above the FMR. Investors should proceed cautiously, focusing on smaller units or multi-family properties to balance the financial risks and rewards. Additionally, engaging in strategic negotiations with landlords could help improve the feasibility of accepting Section 8 vouchers in this market.

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.