Section 8 Fair Market Rent (FMR) for ZIP 55901 - 2027

Investment Score for ZIP 55901

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	$1,220
1 Bedroom	$1,270
2 Bedrooms	$1,470
3 Bedrooms	$2,040
4 Bedrooms	$2,460
5 Bedrooms	$2,854
6 Bedrooms	$3,196
7 Bedrooms	$3,452
8 Bedrooms	$3,625

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
1BR	$1,270	$177,831	0.71%	D
2BR	$1,470	$237,247	0.62%	D
3BR	$2,040	$302,275	0.67%	D
4BR	$2,460	$372,781	0.66%	D
5BR	$2,854	$489,859	0.58%	F

Demographics & Housing Statistics

U.S. Census Bureau data (2024)

### Market Analysis for ZIP Code 55901 (Rochester, MN) #### Section 8 Voucher Dynamics The Fair Market Rent (FMR) for ZIP code 55901 is set by HUD for 2026 as follows: - 0BR: $1160 - 1BR: $1240 - 2BR: $1470 - 3BR: $2040 - 4BR: $2470 To understand how these FMRs compare to actual rents, we need to consider the occupancy rate and renter percentage. The occupancy rate of 94.6% indicates that the housing stock is nearly fully occupied, suggesting a competitive rental market. With 35.7% of the population renting, there is a significant demand for rental properties. However, the FMRs are set below the actual market rents, which can create constraints for voucher holders. For instance, a 2BR unit priced at $1470 is only 18.6% of the median household income, indicating that it is relatively affordable for those earning the median income. But, given the high occupancy rate, finding units that accept vouchers and are priced at or below the FMR could be challenging. #### Affordability & Renter Profile ZIP code 55901 has a median household income of $94,607, which suggests that the area is relatively affluent. The price-to-FMR ratio for a 2BR unit is 13.1x, meaning the median home value ($231,642) is significantly higher than the FMR. This implies that the rental market is tight, with many potential renters facing affordability challenges. Given that 35.7% of the population are renters, there is a substantial segment of the community that relies on rental housing. However, the high price-to-FMR ratio indicates that the majority of rental units are likely priced above the FMR, making it difficult for Section 8 voucher holders to find suitable housing. #### Investor Angle From an investor perspective, the key question is whether properties can generate positive cash flow at the FMR levels. To assess this, we need to look at the typical rental rates compared to the FMRs. For a 2BR unit, the Zillow median price is $231,642, which translates to a monthly mortgage payment of approximately $1,000-$1,200 based on standard financing terms. Adding property taxes, insurance, maintenance, and other expenses, the total cost of ownership would likely exceed the FMR of $1470. Therefore, while it might be possible to break even or slightly profit from a 2BR unit at FMR, it would be challenging to achieve substantial positive cash flow. The investment grade for this ZIP code can be considered moderate to low for Section 8-focused investors due to the tight rental market and the difficulty in finding units that accept vouchers and are priced at or below the FMR. Investors should carefully evaluate the local rental dynamics and the willingness of landlords to accept Section 8 vouchers before committing to this market. #### Specific Actionable Insights 1. **Focus on Smaller Units**: Given the high price-to-FMR ratio, smaller units (0BR and 1BR) are more likely to be priced at or below the FMR. These units are also more likely to be accepted by voucher holders. For example, a 0BR unit priced at $1160 is within the FMR limit and could provide a better chance of securing tenants with vouchers. 2. **Consider Properties Near Major Employers**: Rochester, MN, is home to several major employers such as Mayo Clinic, which employs a large number of people. Properties located near these employers could have a higher likelihood of attracting tenants who are employed and thus more likely to qualify for Section 8 vouchers. Additionally, proximity to employment centers often means higher demand and potentially higher rents, which could help offset some of the challenges associated with the FMR. #### Bottom Line For Section 8-focused investors, the recommendation for ZIP code 55901 is to **Hold**. While there is a significant demand for rental housing, the tight market and high price-to-FMR ratio make it challenging to find properties that can generate positive cash flow at the FMR levels. Investors should focus on smaller units and properties near major employers to increase their chances of success. However, the overall investment grade remains moderate to low due to the competitive nature of the rental market and the difficulty in finding units that accept vouchers and are priced at or below the FMR.

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.