Section 8 Fair Market Rent (FMR) for ZIP 46385 - 2027

Investment Score for ZIP 46385

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	$1,240
1 Bedroom	$1,310
2 Bedrooms	$1,590
3 Bedrooms	$1,940
4 Bedrooms	$2,110
5 Bedrooms	$2,448
6 Bedrooms	$2,742
7 Bedrooms	$2,961
8 Bedrooms	$3,109

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	$1,590	$260,226	0.61%	D
3BR	$1,940	$335,264	0.58%	F
4BR	$2,110	$445,511	0.47%	F
5BR	$2,448	$590,771	0.41%	F

Demographics & Housing Statistics

U.S. Census Bureau data (2024)

### Market Analysis for ZIP Code 46385 (Valparaiso, IN) #### Section 8 Voucher Dynamics The Fair Market Rent (FMR) figures for Valparaiso, IN, in ZIP code 46385, indicate that the rent for a two-bedroom unit is set at $1470 per month. This figure represents approximately 17.8% of the median household income in the area, which stands at $98,957. However, the actual median rent for a two-bedroom unit on Zillow is $255,258, which translates to a monthly rent of roughly $2,127 based on typical mortgage payments and property values. The price-to-FMR ratio of 14.5x suggests that the actual rental prices are significantly higher than the FMR, making it challenging for Section 8 voucher holders to find suitable housing within their budget. For voucher holders, the constraints are clear: they must find landlords willing to accept the lower FMR rates, which can be difficult given the high actual rental prices. Additionally, the limited supply of units available at FMR rates means that voucher holders often face competition and long wait times for affordable housing. #### Affordability & Renter Profile The population of Valparaiso is 40,856, with only 13.4% of residents being renters. This low percentage indicates that the majority of residents own their homes, suggesting a relatively stable and affluent community. The occupancy rate of 95.7% further supports the idea that the market is tight, with few vacancies available. Given the high median household income and the fact that only about 17.8% of the median income is allocated towards a two-bedroom unit's FMR, it is likely that the renters in this area are also relatively well-off compared to national averages. The tight market conditions mean that there is little room for oversupply, and any new rental properties would likely be quickly absorbed by the existing demand. This scenario is favorable for landlords but poses challenges for renters who might struggle to find affordable options. #### Investor Angle From an investor's perspective, the ZIP code 46385 presents a mixed picture when considering cash flow and investment grade. Based on the FMR, a two-bedroom unit should rent for $1470 per month. However, the actual median rental price is much higher, at around $2,127 per month. This discrepancy suggests that landlords who can secure tenants at the higher actual market rates will have better cash flow and returns on investment. To determine if the ZIP code is cash-flow positive at FMR, we need to consider the costs associated with owning and maintaining a rental property. Assuming a typical cost structure where expenses like taxes, insurance, maintenance, and utilities amount to around 50% of the rental income, a landlord renting a two-bedroom unit at FMR would generate a net income of approximately $735 per month ($1470 * 0.5). This is a modest return, especially considering the high median household income in the area. Given the high actual rental prices, the investment grade in this ZIP code is likely to be good, as properties can command higher rents and potentially offer better returns. However, the challenge lies in finding tenants who can afford the higher rents or are willing to accept the lower FMR rates. #### Specific Actionable Insights 1. **Target Higher Rental Prices**: Investors should focus on renting properties at the actual market rates rather than the FMR. For a two-bedroom unit, targeting the $2,127 monthly rent would yield a significantly better return on investment. This approach aligns with the high median household income and the tight rental market. 2. **Consider Property Enhancements**: To attract tenants willing to pay higher rents, investors might consider enhancing the quality of their rental properties. Upgrades such as modern kitchens, updated bathrooms, and energy-efficient appliances could justify higher rental prices and improve the chances of securing tenants. 3. **Engage with Local Real Estate Agents**: Given the tight market, working with local real estate agents who understand the rental dynamics can help landlords find tenants more efficiently. These agents can provide insights into what features are most desirable and how to position properties to appeal to potential renters. #### Bottom Line For Section 8-focused investors, the recommendation for ZIP code 46385 is to **skip** this market. The high actual rental prices and the tight market conditions make it challenging to find properties that can be rented at FMR rates. Additionally, the limited number of renters (only 13.4% of the population) means that the pool of potential Section 8 tenants is small. However, for investors looking to capitalize on the higher actual rental prices and the strong demand for rental properties, this ZIP code could be a **buy** opportunity. The high median household income and the tight occupancy rate suggest that there is significant potential for rental income and property appreciation. In summary, while Valparaiso, IN, is not ideal for Section 8-focused investments due to the high price-to-FMR ratio and limited renter population, it offers attractive opportunities for those willing to target the broader rental market at higher 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.