Location: Lake County, MN | Metro: Duluth, MN-WI MSA
| Unit Size | Monthly FMR |
|---|---|
| Studio | $860 |
| 1 Bedroom | $980 |
| 2 Bedrooms | $1,230 |
| 3 Bedrooms | $1,700 |
| 4 Bedrooms | $2,050 |
| 5 Bedrooms | $2,378 |
| 6 Bedrooms | $2,663 |
| 7 Bedrooms | $2,876 |
| 8 Bedrooms | $3,020 |
U.S. Census Bureau data (2024)
To understand the economics of Section 8 in ZIP 55602, it's essential to grasp the role of the SAFMR, or Small Area Fair Market Rent, which is specific to this ZIP code. For a two-bedroom apartment in ZIP 55602 during fiscal year 2024, the SAFMR is set at $1200. This figure represents the maximum amount that the federal government will pay to cover the rent of a Section 8 tenant in this area.
The SAFMR does not necessarily reflect the local market rent, which is currently unavailable for ZIP 55602. However, the SAFMR is a critical benchmark for landlords participating in the program because it limits the total rent they can charge for a subsidized unit.
A Section 8 voucher is designed to help low-income families afford housing by covering a portion of the rent. The voucher system works by dividing the rent into two parts: the tenant's portion and the government's portion. Tenants typically pay 30% of their adjusted income towards rent. If a tenant's adjusted income is $1000 per month, they would pay $300 towards the rent. The remaining 70% is covered by the government up to the SAFMR limit of $1200. Therefore, if the tenant pays $300, the government would pay the difference, which in this case would be $900, making the total rent $1200.
In addition to the base rent, there are utility allowances. These allowances vary based on the size of the apartment and the location. For a two-bedroom apartment, the utility allowance might be around $300, but this can differ depending on the specifics of the housing authority's policy in ZIP 55602. This allowance is meant to help cover electricity, gas, water, and other household utilities.
The combination of the tenant's payment, the government's subsidy, and the utility allowance forms the complete financial package for a landlord. In ZIP 55602, landlords should expect to receive a total of $1200 for a two-bedroom apartment, assuming the tenant's share plus the government subsidy equals this amount. If the local market rent exceeds $1200, landlords will face a shortfall since the government will not pay more than the SAFMR. Conversely, if the market rent is below $1200, landlords could see a surplus, though this is less likely given the current SAFMR setting.
Given the SAFMR of $1200, landlords must ensure that their rents do not exceed this amount to remain eligible for the Section 8 program. They also need to consider the potential gap between the SAFMR and the actual market rent when deciding whether to participate in the program. For ZIP 55602, the typical reimbursement gap or surplus for a two-bedroom voucher would be zero, as the SAFMR is the ceiling for rent payments under the program.
Data Sources: FMR data from HUD (2027). 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.