Location: Iowa City, IA | Metro: Cedar Rapids, 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 | $1,100 |
| 1 Bedroom | $1,210 |
| 2 Bedrooms | $1,580 |
| 3 Bedrooms | $2,180 |
| 4 Bedrooms | $2,620 |
| 5 Bedrooms | $3,039 |
| 6 Bedrooms | $3,404 |
| 7 Bedrooms | $3,676 |
| 8 Bedrooms | $3,860 |
Zillow median home prices vs Section 8 FMR rates (Data: 2026-08-31)
| Bedrooms | Monthly FMR | Median Price | 1% Rule | Grade |
|---|---|---|---|---|
| 2BR | $1,580 | $251,322 | 0.63% | D |
| 3BR | $2,180 | $336,553 | 0.65% | D |
| 4BR | $2,620 | $390,400 | 0.67% | D |
| 5BR | $3,039 | $498,503 | 0.61% | D |
U.S. Census Bureau data (2024)
A skeptical investor might question whether the Fair Market Rent (FMR) of $1,410 for ZIP 52228 in fiscal year 2024 can sufficiently cover the mortgage on a $327,914 home. According to recent data, the average mortgage rate for ZIP 52228 is around 5.5%, based on national averages which tend to apply to rural areas. This would result in a monthly mortgage payment of approximately $1,872 for a 30-year fixed-rate mortgage, assuming a 20% down payment. Thus, the FMR of $1,410 falls short by about $462 per month. However, it's important to note that the median home price in ZIP 52228 is significantly lower at $201,000, suggesting that many properties in the area may be more affordable.
The investor might also doubt if there is sufficient rental demand at 9.0%. The rental vacancy rate in ZIP 52228 is 9.0%, indicating a moderate level of competition among landlords. While this rate is higher than the national average, it does not necessarily imply a lack of demand. It could suggest a balanced market where there are enough renters to fill most units, but not without some effort to attract tenants.
Another concern could be whether HUD vouchers will keep pace with the market rents of $1,167. HUD voucher values are typically adjusted annually to reflect changes in the local housing market. However, specific data on voucher values for ZIP 52228 is not readily available. In similar markets, vouchers often cover a substantial portion of the rent but rarely reach the full market rate. Landlords should expect to receive a percentage of the market rent through the voucher program, with the remainder paid by the tenant.
In conclusion, while the FMR may not fully cover the mortgage on a higher-priced home, it aligns well with the median home price in ZIP 52228. The rental vacancy rate suggests a competitive yet manageable market. Vouchers provide a reliable source of income but are unlikely to match the full market rent. These points should be considered carefully when deciding to invest in the ZIP 52228 real estate market.
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.