Location: Freeborn County, MN | Metro: Freeborn 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 | $720 |
| 1 Bedroom | $790 |
| 2 Bedrooms | $1,030 |
| 3 Bedrooms | $1,350 |
| 4 Bedrooms | $1,550 |
| 5 Bedrooms | $1,798 |
| 6 Bedrooms | $2,014 |
| 7 Bedrooms | $2,175 |
| 8 Bedrooms | $2,284 |
Zillow median home prices vs Section 8 FMR rates (Data: 2026-08-31)
| Bedrooms | Monthly FMR | Median Price | 1% Rule | Grade |
|---|---|---|---|---|
| 1BR | $790 | $78,413 | 1.01% | B |
| 2BR | $1,030 | $142,109 | 0.72% | D |
| 3BR | $1,350 | $189,529 | 0.71% | D |
| 4BR | $1,550 | $260,017 | 0.6% | F |
| 5BR | $1,798 | $301,584 | 0.6% | F |
U.S. Census Bureau data (2024)
The economics of Section 8 housing in ZIP code 56007, Albert Lea, MN, Freeborn County, hinge on understanding the difference between the federal government's subsidy and the local rental market rates. 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 the government will pay towards a tenant’s rent under the Section 8 Housing Choice Voucher program.
In contrast, the local market rent for a similar two-bedroom unit, as measured by ZORI (Zillow Observed Rent Index), stands at $923. This indicates that the local rental market is slightly below the federal subsidy cap, which can be advantageous for both landlords and tenants.
When a tenant uses a Section 8 voucher, they are typically responsible for paying approximately 30% to 40% of their adjusted income toward rent. For simplicity, let's assume a tenant pays 35% of their income. If we consider an average adjusted income of $1,800 per month, the tenant would contribute around $630 towards rent. This leaves the remainder of the rent, up to the SAFMR limit, to be covered by the government.
In the case of ZIP 56007, the government would cover the difference between the tenant’s contribution and the SAFMR. With a tenant paying $630, the government would reimburse the landlord up to $340 to reach the SAFMR of $970. However, since the local market rent is $923, the actual reimbursement would be calculated as follows:
This means the landlord would receive a total of $923 per month for a two-bedroom unit, with the government covering $293 and the tenant contributing $630. It's important to note that utility allowances are separate and do not affect the base rent calculation. Landlords should ensure that the total rent plus utilities does not exceed the SAFMR to avoid financial penalties.
Given these figures, there is no surplus in this scenario; rather, there is a reimbursement gap where the landlord receives less than the SAFMR but still more than the local market rent. In essence, landlords in ZIP 56007 can expect to receive the full market rent of $923 for a two-bedroom unit when participating in the Section 8 program, with the government providing a significant portion of the payment to make up for the tenant's lower contribution.
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.