Section 8 Fair Market Rent (FMR) for ZIP 56435 - 2027

Investment Score for ZIP 56435

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

Investment Analysis by Bedroom Size

Zillow median home prices vs Section 8 FMR rates (Data: 2026-07-31)

Demographics & Housing Statistics

U.S. Census Bureau data (2024)

To determine if you should buy in ZIP code 56435 (Backus, MN) for Section 8 investment, follow these steps:

Step 1: Clearing Debt Service with FMR

The Fair Market Rent (FMR) for the metro area in fiscal year 2026 is set at $1,010. For a property valued at $283,576, calculate if this rent can cover the debt service.

• If the monthly debt service is less than $1,010, then the answer is Yes. The FMR clears the debt service, making it a viable option.
• If the monthly debt service exceeds $1,010, then the answer is No. The FMR does not sufficiently cover the debt service, indicating a poor financial match for Section 8.

Step 2: Market Rent Comparison

The Census American Community Survey reports the average market rent in Backus, MN at $811 per month.

• If market rent is below $1,010, then the answer is Yes. This indicates that market rents are lower than the FMR, meaning Section 8 tenants could pay a higher portion of the rent compared to other local tenants.
• If market rent is exactly $1,010, then the answer is It Depends. The market rent equals the FMR, which means Section 8 tenants will pay exactly what they would in the private market. Consider the stability and reliability of Section 8 payments versus market fluctuations.
• If market rent is above $1,010, then the answer is No. This suggests that Section 8 rates are lower than what the market would bear, reducing the attractiveness of this investment for landlords looking to maximize income.

Step 3: Demand Analysis

In Backus, MN, 7.2% of the population are renters, and the days on market (DOM) for rental properties is listed as N/A, indicating incomplete data or lack of recent listings.

• If the 7.2% renter rate is high enough to ensure steady demand and the DOM data suggests quick turnover or is not a concern due to other factors, then the answer is Yes. There is sufficient demand to support a Section 8 property.
• If the renter rate is too low to sustain a healthy tenant pool and the DOM data indicates slow turnover or difficulty in finding tenants, then the answer is No. The demand for rentals is insufficient to justify a Section 8 investment.
• If the renter rate is marginal and the DOM data is inconclusive, then the answer is It Depends. Further investigation into the local rental market trends and the specific needs of Section 8 tenants is required to make an informed decision.

Based on the provided data, the decision to invest in ZIP code 56435 for Section 8 properties hinges on your ability to clear debt service with the $1,010 FMR, the comparison between this amount and the $811 market rent, and the analysis of the 7.2% renter rate alongside the unavailability of DOM data. Each step provides a clear path towards a yes, no, or it depends conclusion.

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.