Section 8 Fair Market Rent (FMR) for ZIP 55125 - 2027

Investment Score for ZIP 55125

Based on 1% Rule: A+ (≥1.5%) | A (≥1.2%) | B (≥1.0%) | C (≥0.8%) | D (≥0.6%) | F (<0.6%)

FY 2027 Fair Market Rent Rates

Unit Size	Monthly FMR
Studio	$1,620
1 Bedroom	$1,830
2 Bedrooms	$2,220
3 Bedrooms	$2,900
4 Bedrooms	$3,250
5 Bedrooms	$3,770
6 Bedrooms	$4,222
7 Bedrooms	$4,560
8 Bedrooms	$4,788

Investment Analysis by Bedroom Size

Zillow median home prices vs Section 8 FMR rates (Data: 2026-07-31)

Bedrooms	Monthly FMR	Median Price	1% Rule	Grade
1BR	$1,830	$172,723	1.06%	B
2BR	$2,220	$258,302	0.86%	C
3BR	$2,900	$404,173	0.72%	D
4BR	$3,250	$491,032	0.66%	D
5BR	$3,770	$573,222	0.66%	D

Demographics & Housing Statistics

U.S. Census Bureau data (2024)

### Market Analysis for ZIP Code 55125 (Woodbury, MN) #### Section 8 Voucher Dynamics The Fair Market Rent (FMR) for Woodbury, MN (ZIP 55125) in 2026 is set at $2,230 for a two-bedroom unit. This represents 22.4% of the median household income in the area, which is $119,260. The FMRs for other bedroom types are as follows: - 0BR: $1,620 - 1BR: $1,830 - 3BR: $2,950 - 4BR: $3,300 To understand how these FMRs compare to actual rents, we need to consider the price-to-FMR ratio, which is 9.5x for a two-bedroom unit. Given that the Zillow median price for a two-bedroom home is $255,273, the actual rent for a similar unit would be approximately $2,687 ($255,273 / 9.5). This means that voucher holders face significant constraints, as the actual rent exceeds the FMR by about $457 per month for a two-bedroom unit. For a three-bedroom unit, the FMR is $2,950, but if the price-to-FMR ratio holds, the actual rent would be around $3,105, again exceeding the FMR. #### Affordability & Renter Profile Woodbury has a population of 44,185, with 22.4% of residents being renters. The occupancy rate stands at 98.6%, indicating a very tight rental market with little vacancy. The median household income of $119,260 suggests that the majority of residents are relatively affluent. However, for those relying on Section 8 vouchers, the high actual rents make it challenging to find affordable housing. The FMR for a two-bedroom unit is $2,230, which is only 22.4% of the median income, highlighting that while the FMR is designed to be affordable, the actual rents are significantly higher. #### Investor Angle From an investor perspective, the ZIP code 55125 offers a mixed picture. While the median household income is high, the actual rents are also quite elevated compared to the FMRs. To determine if this ZIP is cash-flow positive at FMR, we must consider the typical rental prices versus the FMR. For a two-bedroom unit, the FMR is $2,230, but the actual rent is closer to $2,687. If an investor were to rely solely on FMRs, they would likely face negative cash flow due to the disparity between FMR and actual rent. The investment grade can be assessed based on the demand for rental properties and the ability to secure tenants. With an occupancy rate of 98.6%, there is strong demand for rentals, which could support higher rents. However, the reliance on Section 8 vouchers would limit the potential rental income to the FMR levels, which are lower than what the market demands. Therefore, the investment grade is moderate to low for Section 8-focused investors. #### Specific Actionable Insights 1. **Focus on Smaller Units**: Investors should consider focusing on smaller units like one-bedroom apartments, where the FMR is $1,830. These units are more likely to be rented out at or near the FMR without significant financial strain, given the high demand in the area. 2. **Consider Mixed-Income Developments**: Developments that cater to both voucher holders and market-rate tenants can provide a balanced approach. By offering some units at FMR rates and others at market rates, investors can mitigate the risk of negative cash flow while still serving the community. 3. **Location-Specific Strategies**: Given the high occupancy rate, investors should look into areas within Woodbury that have slightly higher vacancy rates or are less desirable. These areas might offer better opportunities to rent units closer to the FMR without significant difficulty. #### Bottom Line Given the tight rental market and the significant gap between FMR and actual rents, the recommendation for Section 8-focused investors is to **Skip** this ZIP code unless they can implement mixed-income strategies or focus on smaller units. The high actual rents make it difficult to achieve positive cash flow when adhering strictly to FMRs, and the limited vacancy makes finding suitable tenants a challenge.

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.