Location: McLeod County, MN | Metro: McLeod County, MN
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 | $830 |
| 1 Bedroom | $900 |
| 2 Bedrooms | $1,010 |
| 3 Bedrooms | $1,210 |
| 4 Bedrooms | $1,520 |
| 5 Bedrooms | $1,763 |
| 6 Bedrooms | $1,975 |
| 7 Bedrooms | $2,133 |
| 8 Bedrooms | $2,240 |
Zillow median home prices vs Section 8 FMR rates (Data: 2026-08-31)
| Bedrooms | Monthly FMR | Median Price | 1% Rule | Grade |
|---|---|---|---|---|
| 2BR | $1,010 | $253,192 | 0.4% | F |
| 3BR | $1,210 | $311,766 | 0.39% | F |
| 4BR | $1,520 | $348,709 | 0.44% | F |
U.S. Census Bureau data (2024)
The economics of Section 8 in ZIP code 55354, which encompasses Lester Prairie, MN, and McLeod County, are straightforward. The SAFMR (Small Area Fair Market Rent) for a two-bedroom apartment in this ZIP code for fiscal year 2026 is set at $970. This figure represents the maximum amount that the housing authority will pay to landlords participating in the Section 8 program.
In contrast, the local market rent for a similar two-bedroom unit, based on Census ACS data, averages around $725. This discrepancy between the SAFMR and the actual market rent is significant and can impact a landlord's decision to participate in the program.
When a tenant receives a Section 8 voucher, they are responsible for paying a portion of their rent, typically 30% of their adjusted income. In ZIP 55354, if we assume an average adjusted income of $1,500 per month, the tenant would pay approximately $450 towards rent. The remaining balance is covered by the housing authority up to the SAFMR limit. For utilities, the housing authority also provides an allowance, which varies but is generally around $200 for a two-bedroom apartment.
This means that for a two-bedroom apartment in ZIP 55354, the total reimbursement a landlord would receive from the housing authority would be the sum of the tenant's contribution and the utility allowance, capped at the SAFMR. In this scenario, the landlord would receive $650 from the tenant and the utility allowance combined. However, since the SAFMR is $970, the landlord would only receive the $650 if the total exceeds the market rent of $725.
To illustrate, let's use the local market rent of $725 as a baseline. The housing authority would cover the difference between the tenant's payment ($450) and the market rent ($725), plus the utility allowance. Therefore, the landlord would receive the full $725 market rent plus the $200 utility allowance, totaling $925. Since this amount does not exceed the SAFMR of $970, the landlord receives the full reimbursement without any adjustments.
Given these figures, there is no reimbursement gap in ZIP 55354. Instead, landlords participating in the Section 8 program for a two-bedroom apartment can expect a surplus of $55 over the market rent when the tenant's portion and utility allowance are factored in. This surplus ensures that landlords receive more than the average market rent, providing a financial incentive to participate in the program.
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.