Section 8 Fair Market Rent (FMR) for ZIP 56560 - 2027

Investment Score for ZIP 56560

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	$840
1 Bedroom	$970
2 Bedrooms	$1,190
3 Bedrooms	$1,650
4 Bedrooms	$1,990
5 Bedrooms	$2,308
6 Bedrooms	$2,585
7 Bedrooms	$2,792
8 Bedrooms	$2,932

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
2BR	$1,190	$216,211	0.55%	F
3BR	$1,650	$273,641	0.6%	D
4BR	$1,990	$330,580	0.6%	D

Demographics & Housing Statistics

U.S. Census Bureau data (2024)

### Market Analysis for ZIP Code 56560 (Moorhead, MN) #### Section 8 Voucher Dynamics The Fair Market Rent (FMR) for ZIP code 56560 is set by HUD for 2026, with specific rates for different unit sizes. For a two-bedroom apartment, the FMR is $1,170 per month. This figure represents 18.6% of the median household income in Moorhead, which stands at $75,406. The FMR is intended to reflect the average rent that voucher holders can afford, but it is important to understand how these rates compare to actual rental prices in the area. Actual rents in Moorhead are likely higher than the FMR, especially considering the high occupancy rate of 96.4%. This suggests that there is strong demand for rental units, which could drive up rental prices. However, the exact comparison between FMR and actual rents is not provided in the data, so we must infer that the actual rents might exceed the FMR, creating a challenge for voucher holders who are constrained by the maximum allowable rent. #### Affordability & Renter Profile The population of Moorhead is 44,405, with 41.0% of residents being renters. This indicates a significant portion of the local population relies on rental housing, making the rental market a critical component of the overall housing landscape. Given the high occupancy rate and the percentage of renters, it is clear that the market is relatively tight, meaning there is little excess supply of rental units. The median household income of $75,406 provides some context for the affordability of housing. With 18.6% of this income allocated towards a two-bedroom apartment, the remaining 81.4% would need to cover other living expenses, including food, healthcare, transportation, and education. This suggests that while the FMR is designed to be affordable, it still leaves a substantial portion of income dedicated to housing costs, potentially straining budgets for low-income families. #### Investor Angle From an investor perspective, the key question is whether the ZIP code can generate positive cash flow at the FMR levels. The Zillow median price for a two-bedroom home in Moorhead is $208,415. Given the price-to-FMR ratio of 14.8x, we can estimate the potential rental income relative to the purchase price. If an investor purchases a two-bedroom property for $208,415 and rents it out at the FMR of $1,170 per month, the annual rental income would be $14,040. To determine if this is cash-flow positive, we need to consider the typical operating expenses, mortgage payments, and other costs associated with owning rental property. Assuming a conservative mortgage rate of 4.5% and a 20% down payment, the monthly mortgage payment would be approximately $865, leading to an annual mortgage payment of $10,380. Operating expenses such as maintenance, insurance, and property taxes typically range from 30% to 50% of the gross rental income. If we assume a 40% operating expense ratio, the annual operating expenses would be around $5,616. Adding the mortgage payment and operating expenses together, the total annual cost would be $16,000, which exceeds the annual rental income of $14,040. Therefore, renting out a property at the FMR would likely result in a negative cash flow scenario. #### Specific Actionable Insights 1. **Rent Pricing Strategy**: Investors should consider pricing their units slightly below the FMR to attract Section 8 voucher holders. For example, setting the rent at $1,100 instead of $1,170 could make the property more attractive to voucher holders while still providing a competitive rental income. 2. **Property Location**: Focus on properties located in areas with higher concentrations of low-income households, as these areas are more likely to have a larger pool of Section 8 voucher holders. Additionally, properties near amenities like public transportation, schools, and grocery stores may command slightly higher rents without exceeding the FMR. 3. **Occupancy Management**: Given the high occupancy rate of 96.4%, landlords should prioritize maintaining a high occupancy rate to minimize vacancy costs. This can be achieved through regular maintenance, competitive pricing, and marketing efforts aimed at attracting and retaining tenants. #### Bottom Line Based on the provided data, the ZIP code 56560 (Moorhead, MN) presents a challenging environment for Section 8-focused investors. The high occupancy rate and tight rental market suggest that actual rents may exceed the FMR, making it difficult for voucher holders to find suitable housing. Moreover, the price-to-FMR ratio indicates that purchasing properties at the median price and renting them out at the FMR would likely result in negative cash flow. **Recommendation**: Skip. The current market conditions and the financial metrics suggest that investing in this ZIP code with a focus on Section 8 vouchers would not be financially viable due to the negative cash flow potential and the challenges in finding properties that fit within the FMR guidelines.

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.