Location: Waterloo-Cedar Falls, IA | Metro: Waterloo-Cedar Falls, 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 | $960 |
| 2 Bedrooms | $1,260 |
| 3 Bedrooms | $1,610 |
| 4 Bedrooms | $2,110 |
| 5 Bedrooms | $2,448 |
| 6 Bedrooms | $2,742 |
| 7 Bedrooms | $2,961 |
| 8 Bedrooms | $3,109 |
Zillow median home prices vs Section 8 FMR rates (Data: 2026-08-31)
| Bedrooms | Monthly FMR | Median Price | 1% Rule | Grade |
|---|---|---|---|---|
| 3BR | $1,610 | $211,922 | 0.76% | D |
U.S. Census Bureau data (2024)
A skeptical investor might question whether the Fair Market Rent (FMR) of $1,090 for ZIP 50642 will sufficiently cover the mortgage on a home valued at $209,411. To assess this, let's consider the current mortgage rates. According to recent data, typical mortgage rates hover around 5% to 6%, which would result in a monthly mortgage payment of approximately $1,100 to $1,200 for a home of that value. Given that the FMR is slightly below the lower end of this range, it indicates that covering the mortgage solely with FMR would be challenging without additional income sources or equity.
The investor could also express doubt about the demand for rental properties given the rental vacancy rate of 9.1%. While this rate suggests a relatively balanced market, it does not indicate high demand. However, the data from Best Places shows that only 17.8% of the households in ZIP 50642 are renters, which means there is a significant portion of the population that could potentially be interested in renting. Additionally, the fact that most homes are owner-occupied or mortgaged implies that the market has a stable foundation, but it requires careful consideration of the local rental dynamics to ensure sufficient demand.
Another concern might be whether housing vouchers will keep pace with the market rents of $1,087. The Housing Choice Voucher (HCV) Data Dashboard provides insights into the utilization and trends of vouchers, but it does not specify the exact amounts for ZIP 50642. Based on the FMR Lookup Tool, the FMR for a 2-bedroom unit in ZIP 50642 is set at $1,090, which aligns closely with the market rents. This suggests that voucher holders can generally afford market rates, but the specific utilization rate for ZIP 50642 is not readily available. Therefore, while the FMR is in line with market rents, the extent to which vouchers are utilized locally remains uncertain.
In summary, while the FMR of $1,090 can provide a reasonable estimate of rental income, it may fall short of covering the mortgage on a $209,411 home. The rental vacancy rate of 9.1% suggests a stable but not highly competitive rental market. Lastly, although the FMR is close to market rents, the specific voucher utilization rate for ZIP 50642 needs further investigation to fully understand the potential impact on rental income stability.
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.