Section 8 Fair Market Rent (FMR) for ZIP 55304 - 2027

Investment Score for ZIP 55304

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	$1,460
1 Bedroom	$1,650
2 Bedrooms	$2,000
3 Bedrooms	$2,610
4 Bedrooms	$2,930
5 Bedrooms	$3,399
6 Bedrooms	$3,807
7 Bedrooms	$4,112
8 Bedrooms	$4,318

Investment Analysis by Bedroom Size

Zillow median home prices vs Section 8 FMR rates (Data: 2026-08-31)

Bedrooms	Monthly FMR	Median Price	1% Rule	Grade
2BR	$2,000	$363,476	0.55%	F
3BR	$2,610	$416,664	0.63%	D
4BR	$2,930	$482,446	0.61%	D
5BR	$3,399	$563,876	0.6%	D

Demographics & Housing Statistics

U.S. Census Bureau data (2024)

### Market Analysis for ZIP Code 55304 (Andover, MN) #### Section 8 Voucher Dynamics The Fair Market Rent (FMR) for Andover, MN (ZIP 55304) in 2026 is set at $2080 for a two-bedroom unit. This figure represents 19.0% of the median household income of $131,700 in the area. However, the actual rental market in Andover is significantly higher. The Zillow median price for a two-bedroom home is $356,866, which translates to a price-to-FMR ratio of 14.3x. This means that the actual rent for a two-bedroom unit could be approximately $29,680 annually, or $2473 monthly, based on the Zillow median price. Given these figures, the FMR is far below the actual market rents. For instance, a two-bedroom unit would likely cost around $2473 per month, compared to the FMR of $2080. This creates a significant constraint for voucher holders, who may find it challenging to secure housing that meets their needs within the FMR limits. #### Affordability & Renter Profile Andover has a very low renter population percentage of only 6.0%, indicating that the majority of residents own their homes. The occupancy rate is high at 98.5%, suggesting a tight rental market with limited availability. Given the median household income of $131,700, the typical resident in Andover is well above the national average, making them less reliant on rental assistance programs like Section 8. The high median income and low renter population suggest that those who do rent are likely to be able to afford higher rents without assistance. The tight market conditions mean that there is little room for lower-priced rentals, further complicating the situation for voucher holders. #### Investor Angle From an investor perspective, the ZIP code 55304 is not particularly favorable for cash flow when relying solely on FMR. The FMR for a two-bedroom unit is $2080, but the actual market rent is estimated at $2473. This implies that landlords who want to remain competitive in the rental market will need to charge more than the FMR to cover costs and generate a profit. The investment grade in this area is likely to be high due to the strong economic indicators and low vacancy rates. However, the reliance on market rents rather than FMR means that landlords must consider the broader rental market dynamics and the ability of tenants to pay higher rents. #### Specific Actionable Insights 1. **Focus on Higher-Rent Units**: Given the tight rental market and the disparity between FMR and actual rents, investors should focus on units that can command higher rents. A two-bedroom unit priced at $2473 per month would be more aligned with market conditions and provide better cash flow. 2. **Consider Non-Section 8 Tenants**: With only 6.0% of the population renting, and the high median income, there is a strong potential for attracting non-Section 8 tenants who can afford market rates. This would reduce dependency on government vouchers and increase profitability. 3. **Explore Multi-Family Properties**: Since the occupancy rate is high at 98.5%, multi-family properties might offer a better opportunity to capture a larger share of the rental market. Investors should look into properties with multiple units, such as duplexes or small apartment buildings, to diversify their tenant base and improve overall returns. #### Bottom Line For Section 8-focused investors, the ZIP code 55304 (Andover, MN) is not recommended. The high price-to-FMR ratio and tight rental market make it challenging to find suitable properties within the FMR limits. Additionally, the low renter population percentage indicates that there is limited demand for subsidized housing. Therefore, the recommendation is to **skip** this ZIP code for Section 8 investments and instead consider areas with higher renter populations and more affordable market rents.

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.