Section 8 Fair Market Rent (FMR) for ZIP 48242 - 2027

FY 2027 Fair Market Rent Rates

To understand the economics of Section 8 in ZIP code 48242, it's crucial to know the specifics of the housing assistance payment (HAP) rates and how they interact with market rents. The SAFMR (Small Area Fair Market Rent) for a two-bedroom apartment in this ZIP code is set at $1220 for fiscal year 2024. This figure represents the maximum amount that the Housing Choice Voucher program will pay toward rent, based on the specific conditions and rental market of ZIP 48242.

The SAFMR is calculated to ensure that rents are affordable for low-income families while also reflecting the actual rental costs in the area. However, the local market rent for a two-bedroom unit in ZIP 48242 is currently unavailable. This means that landlords must rely on the SAFMR to estimate the viability of renting to Section 8 tenants. It's important to note that the SAFMR is adjusted annually to reflect changes in the local rental market, so staying informed about these updates can be beneficial for landlords.

A voucher payment consists of two parts: the tenant's contribution and the HAP. The tenant is required to pay 30% of their adjusted income toward rent. If the tenant's share plus the utility allowance does not cover the SAFMR, the difference is made up by the government through the HAP. For example, if a tenant's portion of the rent is $366 (assuming an adjusted income of $1220), and the utility allowance is $150, the total voucher payment would be $516. In this case, the landlord would receive $704 from the government to make up the difference between the tenant's payment and the SAFMR.

The utility allowance is a fixed amount designed to help cover the cost of utilities. It varies depending on the size of the unit and the specific needs of the household. In ZIP 48242, the utility allowance for a two-bedroom unit is $150. This amount is added to the tenant's contribution to determine the total voucher payment.

In ZIP 48242, landlords should expect a reimbursement gap for two-bedroom units. Given the SAFMR of $1220 and assuming a tenant's contribution of $366 (30% of the SAFMR), the total voucher payment would be $666 ($366 + $150 utility allowance). Therefore, the reimbursement gap would be $554 ($1220 - $666).

This reimbursement gap is the amount that the government pays to make up the difference between what the tenant contributes and the SAFMR. Landlords should factor this into their decision-making process when considering whether to rent to Section 8 tenants. While the SAFMR provides a stable and predictable income source, it may not fully match the local market rent, which can vary widely and is currently unknown for ZIP 48242.

Data Sources: FMR data from HUD (2027).

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.