Section 8 Fair Market Rent (FMR) for ZIP 56001 - 2027

Investment Score for ZIP 56001

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	$1,120
1 Bedroom	$1,120
2 Bedrooms	$1,350
3 Bedrooms	$1,870
4 Bedrooms	$1,910
5 Bedrooms	$2,216
6 Bedrooms	$2,482
7 Bedrooms	$2,681
8 Bedrooms	$2,815

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	$1,120	$216,614	0.52%	F
2BR	$1,350	$280,436	0.48%	F
3BR	$1,870	$289,823	0.65%	D
4BR	$1,910	$353,527	0.54%	F
5BR	$2,216	$422,490	0.52%	F

Demographics & Housing Statistics

U.S. Census Bureau data (2024)

### Market Analysis for ZIP Code 56001 (Mankato, MN) #### Section 8 Voucher Dynamics The Fair Market Rent (FMR) for ZIP code 56001 in Mankato, MN, as of 2026, is set at $1290 for a two-bedroom unit. This figure represents 22.3% of the median household income in the area, which stands at $69,531. The FMR is designed to reflect the average rent that voucher holders can afford, but it is important to understand how this compares to actual rental prices. According to Zillow, the median price for a two-bedroom home in this ZIP code is $242,675. However, the price-to-FMR ratio is an astounding 15.7x, indicating that the actual rental costs are significantly higher than what the FMR suggests. For instance, if we assume that the rental cost is proportional to the purchase price, a two-bedroom unit would likely rent for around $1,000 per month, which is still above the FMR of $1290. This means that voucher holders face significant constraints in finding affordable housing, as many units exceed their budget. #### Affordability & Renter Profile ZIP code 56001 has a high renter population percentage of 45.9%, suggesting that there is a substantial demand for rental properties. With an occupancy rate of 92.7%, the market appears to be relatively tight, indicating that there is little excess supply of rental units. Given the high proportion of renters and the limited availability of units, the competition for affordable housing is likely intense. The median household income of $69,531 provides some context on the economic profile of residents. A two-bedroom unit at $1290 per month represents 22.3% of this income, which is a reasonable rent burden for most households. However, the actual rental costs being much higher than the FMR suggest that affordability is a significant issue for many residents, particularly those who rely on Section 8 vouchers. #### Investor Angle From an investor's perspective, the ZIP code 56001 presents both opportunities and challenges. The actual rental costs are significantly higher than the FMR, which could make it difficult to find properties that are cash-flow positive at the FMR level. For example, a two-bedroom unit renting at $1,000 per month would need to be priced at approximately $160,000 to break even based on typical rental yields, assuming a yield of 6-7%. However, given the median home value of $242,675, this would imply a negative cash flow unless the property can command a higher rent. The investment grade of properties in this ZIP code is likely to be moderate to low due to the high price-to-FMR ratio. Investors should carefully consider the potential for vacancy and the ability to attract tenants willing to pay the higher rents required to achieve positive cash flow. #### Specific Actionable Insights 1. **Target Properties Below Median Value**: Investors should focus on acquiring properties below the median value of $242,675 to ensure they can achieve positive cash flow. For instance, a two-bedroom unit priced at $160,000 would be more likely to generate sufficient rental income to cover expenses. 2. **Consider Smaller Units**: Given the high price-to-FMR ratio, smaller units such as one-bedroom apartments might be more attractive to voucher holders. The FMR for a one-bedroom unit is $1080, which is lower than the FMR for a two-bedroom unit. Investing in one-bedroom units could provide better alignment with the financial capabilities of voucher holders. #### Bottom Line For Section 8-focused investors, the ZIP code 56001 presents a challenging environment due to the high price-to-FMR ratio and limited supply of affordable units. The recommendation is to **Skip** this market unless you can find properties priced well below the median value, specifically targeting one-bedroom units where the FMR is lower and more aligned with tenant budgets. Otherwise, the likelihood of achieving positive cash flow is low, and the risk of vacancy is high.

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.