Location: Ames, IA | Metro: Ames, IA 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 | $880 |
| 1 Bedroom | $930 |
| 2 Bedrooms | $1,040 |
| 3 Bedrooms | $1,450 |
| 4 Bedrooms | $1,750 |
| 5 Bedrooms | $2,030 |
| 6 Bedrooms | $2,274 |
| 7 Bedrooms | $2,456 |
| 8 Bedrooms | $2,579 |
Zillow median home prices vs Section 8 FMR rates (Data: 2026-07-31)
| Bedrooms | Monthly FMR | Median Price | 1% Rule | Grade |
|---|---|---|---|---|
| 3BR | $1,450 | $227,218 | 0.64% | D |
U.S. Census Bureau data (2024)
A skeptical investor considering ZIP 50278 might have several concerns regarding the viability of investing in rental properties under the Section 8 program. Let's address these concerns head-on using available data.
Will Fair Market Rent (FMR) of $890 cover the mortgage on a $255,120 home?
To determine if the FMR will sufficiently cover mortgage payments, we must first calculate the expected monthly mortgage payment. Assuming a standard 30-year fixed-rate mortgage with an interest rate of 4%, the monthly payment on a $255,120 home would be approximately $1,235. This means that the FMR of $890 does not fully cover the mortgage payment. However, it's important to note that landlords can also charge a portion of the tenant's income towards the rent, typically up to 40%. If the average household income in ZIP 50278 is around $30,000 annually, then a 40% contribution from the tenant would amount to roughly $1,000 per month, bringing the total potential rental income to $1,890. This exceeds the mortgage payment and leaves room for other expenses such as maintenance, insurance, and property taxes.
Is there enough renter demand at 16.6%?
The percentage of renter-occupied homes in ZIP 50278 is 16.6%, which may seem low compared to urban areas with higher percentages. However, this figure alone does not provide a complete picture of the rental market. To gauge demand accurately, one should look at vacancy rates and the number of rental listings. Unfortunately, the data provided does not include these metrics. A lower percentage of renters could indicate a smaller pool of potential tenants, but it could also suggest a more stable housing market with fewer turnovers, which is beneficial for long-term investments.
Will vouchers keep pace with $693 market rents?
The FMR set by HUD for ZIP 50278 is $890, while the current market rent stands at $693. This indicates that vouchers are currently above market rates, providing a buffer for landlords. However, the concern remains whether voucher amounts will continue to match or exceed market rents as time progresses. To answer this, one must consider historical trends in both FMR adjustments and local rent growth. The data provided does not offer insights into past adjustments or future projections. It's prudent for investors to monitor local rental market trends and FMR updates closely to ensure they remain competitive and financially viable.
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.