Location: Scott County, IN | Metro: Louisville, KY-IN HUD Metro FMR Area
Based on 1% Rule: A+ (≥1.5%) | A (≥1.2%) | B (≥1.0%) | C (≥0.8%) | D (≥0.6%) | F (<0.6%)
| Unit Size | Monthly FMR |
|---|---|
| Studio | $1,110 |
| 1 Bedroom | $1,200 |
| 2 Bedrooms | $1,510 |
| 3 Bedrooms | $1,910 |
| 4 Bedrooms | $2,180 |
| 5 Bedrooms | $2,529 |
| 6 Bedrooms | $2,832 |
| 7 Bedrooms | $3,059 |
| 8 Bedrooms | $3,212 |
Zillow median home prices vs Section 8 FMR rates (Data: 2026-08-31)
| Bedrooms | Monthly FMR | Median Price | 1% Rule | Grade |
|---|---|---|---|---|
| 2BR | $1,510 | $177,849 | 0.85% | C |
| 3BR | $1,910 | $257,563 | 0.74% | D |
| 4BR | $2,180 | $351,003 | 0.62% | D |
U.S. Census Bureau data (2024)
To determine if you should buy in ZIP 47138 (Lexington, IN) for Section 8, follow this decision tree:
1) Does FMR $1280 (zip FY 2024) clear debt service on a $251,902 property?
No: The Fair Market Rent (FMR) of $1280 does not clear the debt service on a property valued at $251,902. Debt service typically includes mortgage payments, property taxes, insurance, and maintenance costs. At this valuation, the monthly rental income would be insufficient to cover these expenses.
Yes: If your property cost is lower than $251,902, then the FMR of $1280 could potentially cover the debt service. For instance, if the property cost is around $150,000, the monthly rental income might be sufficient to cover the debt service assuming reasonable rates for mortgage, taxes, insurance, and maintenance.
It depends: If the property cost is close to but slightly under $251,902, the viability hinges on the specifics of the mortgage rate, property taxes, insurance premiums, and maintenance costs. Calculate these costs to see if the FMR can cover them.
2) Is market rent $1,329 (Census ACS) above, at, or below FMR?
Above: The market rent of $1,329 exceeds the FMR of $1280, indicating that there is potential to earn more than the Section 8 payment. This can be beneficial for covering higher debt service costs or generating profit.
At: If the market rent equals the FMR, there's little room for profit beyond covering the basic costs. This scenario is less favorable unless you're targeting cost coverage rather than profit.
Below: If the market rent were below the FMR, it would suggest an overpriced Section 8 program relative to the local market. However, since the market rent is above the FMR, this branch does not apply.
3) Are 7.0% renters + N/A-day DOM enough demand?
No: With only 7.0% of the population being renters, the demand for rental properties in ZIP 47138 is low. Additionally, the absence of data on days on market (DOM) suggests either a stable market with quick rentals or a lack of recent transaction data. In any case, the low percentage of renters indicates limited demand for Section 8 properties.
Yes: If the 7.0% represents a significant number of households and the DOM is short, there might still be enough demand. However, the current data points towards a weak rental market.
It depends: The viability of investing in this area based on the percentage of renters and DOM data requires further investigation into the total number of households and the trend of DOM over time. A deeper analysis of the rental market's health will clarify whether the demand is sufficient.
In conclusion, the decision to invest in ZIP 47138 for Section 8 properties is contingent upon the cost of the property, the ability to generate income above FMR, and the strength of the rental market. Given the data, the investment appears risky unless the property cost is significantly lower than $251,902 and the rental market shows signs of improvement.
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.