Location: Watonwan County, MN | Metro: Mankato, MN MSA
| Unit Size | Monthly FMR |
|---|---|
| Studio | $880 |
| 1 Bedroom | $930 |
| 2 Bedrooms | $1,120 |
| 3 Bedrooms | $1,470 |
| 4 Bedrooms | $1,730 |
| 5 Bedrooms | $2,007 |
| 6 Bedrooms | $2,248 |
| 7 Bedrooms | $2,428 |
| 8 Bedrooms | $2,549 |
U.S. Census Bureau data (2024)
The economics of Section 8 in ZIP code 56060 operate under specific financial guidelines that affect both landlords and tenants. For a two-bedroom apartment in this ZIP code, the SAFMR (Small Area Fair Market Rent) for FY 2024 is set at $980. This SAFMR figure is crucial because it represents the maximum amount that the housing authority will pay for a two-bedroom unit in this specific ZIP code.
Local market rents, according to Census ACS data, average around $625 for a similar two-bedroom unit. This discrepancy between the SAFMR and the actual market rent can create a unique financial situation for landlords participating in the Section 8 program.
A Section 8 voucher works by covering a portion of the rent that a tenant cannot afford on their own. The voucher pays the difference between what the tenant can afford (typically 30% of their adjusted income) and the rent. In ZIP 56060, if a landlord charges $980 for a two-bedroom unit, the housing authority will reimburse up to this amount, provided the tenant's share plus the utility allowance equals the total rent.
The tenant portion of the rent is calculated based on their income. If a tenant's monthly adjusted income is $1,000, they would be expected to pay 30%, which is $300. The remaining rent, up to the SAFMR limit, is covered by the voucher. In our example, the voucher would cover the difference between the tenant's share and the rent, so it would pay $680.
In addition to the rent, there is an allowance for utilities. This allowance varies but is intended to help cover the costs of electricity, gas, water, and other services. If we assume an average utility allowance of $150, the total reimbursement for the landlord would be the sum of the voucher payment and the utility allowance, totaling $830.
This means that if you charge $980 for a two-bedroom apartment, you will have a reimbursement gap of $150. In essence, you would receive $830 from the voucher and utility allowance combined, leaving you to absorb the remaining $150. Alternatively, if you charge less than the SAFMR, say $750, the reimbursement gap would be smaller, at $120.
For landlords, understanding these economics is essential when deciding whether to participate in the Section 8 program. While the program ensures timely payments and stable tenancy, it also requires careful consideration of the reimbursement gap versus the local market rent. In ZIP 56060, the typical reimbursement gap for a two-bedroom unit is $150, which must be factored into your rental strategy.
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.