Section 8 Fair Market Rent (FMR) for ZIP 60540 - 2027

Investment Score for ZIP 60540

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	$2,250
1 Bedroom	$2,390
2 Bedrooms	$2,700
3 Bedrooms	$3,470
4 Bedrooms	$3,970
5 Bedrooms	$4,605
6 Bedrooms	$5,158
7 Bedrooms	$5,571
8 Bedrooms	$5,850

Investment Analysis by Bedroom Size

Zillow median home prices vs Section 8 FMR rates (Data: 2026-08-31)

Bedrooms	Monthly FMR	Median Price	1% Rule	Grade
1BR	$2,390	$286,856	0.83%	C
2BR	$2,700	$347,586	0.78%	D
3BR	$3,470	$531,999	0.65%	D
4BR	$3,970	$738,522	0.54%	F
5BR	$4,605	$1,079,849	0.43%	F

Demographics & Housing Statistics

U.S. Census Bureau data (2024)

### Market Analysis for ZIP Code 60540 (Naperville, IL) #### Section 8 Voucher Dynamics The Fair Market Rent (FMR) for ZIP code 60540 in Naperville, IL, is set by HUD for 2026. The FMRs are as follows: - 0BR: $1970 - 1BR: $2100 - 2BR: $2370 (which represents 18.1% of the median household income) - 3BR: $3050 - 4BR: $3530 To understand how these FMRs compare to actual rents, we need to consider the occupancy rate and the renter percentage. With an occupancy rate of 93.6%, it suggests that the housing stock is relatively well-utilized, indicating a potentially competitive rental market. Additionally, only 24.5% of the population are renters, which implies a smaller pool of potential voucher holders relative to homeowners. Given that the median household income is $157,102, the 2BR FMR of $2370 is indeed affordable at 18.1% of the median income. However, the challenge for voucher holders lies in finding units that are willing to accept Section 8 vouchers. In a highly competitive market like Naperville, landlords might prefer higher-paying tenants who do not require government subsidies. #### Affordability & Renter Profile The renter profile in Naperville is likely composed of individuals and families who can afford higher rents due to the high median household income. The 24.5% renter population suggests that there is a significant number of homeowners, which could indicate a preference for ownership over renting in this area. This preference could make it difficult for voucher holders to find suitable units, especially given the limited supply of rental properties. The occupancy rate of 93.6% further supports the notion that the rental market is tight. This means that there is little room for additional rental units, and the competition for available units is likely fierce. Consequently, voucher holders may struggle to find units that meet their needs and are willing to accept their vouchers. #### Investor Angle From an investor perspective, the ZIP code 60540 presents both opportunities and challenges. The price-to-FMR ratio of 12.1x for a 2BR unit indicates that the purchase price ($343,506) is significantly higher than the FMR ($2370). This high ratio suggests that the cost of acquiring rental property in this area is expensive relative to the rent that can be charged under the Section 8 program. To determine if this ZIP code is cash-flow positive at FMR, we must consider the typical operating costs and mortgage payments associated with owning a rental property. Assuming a conservative estimate of 1% of the purchase price as monthly maintenance and property management costs, this would amount to approximately $2,863 per month for a 2BR unit. Given the FMR of $2370, it is clear that the rental income would not cover the operating expenses, let alone the mortgage payment. The investment grade for this ZIP code is likely low for Section 8-focused investors due to the high acquisition costs and the limited ability to generate sufficient cash flow from rental income. Investors should carefully evaluate the potential returns and risks before entering this market. #### Specific Actionable Insights 1. **Focus on Smaller Units**: Given the high price-to-FMR ratio, investors might consider focusing on smaller units such as 0BR or 1BR apartments. These units have lower FMRs but also lower acquisition costs, making them more feasible for generating positive cash flow. For example, a 0BR unit with an FMR of $1970 might be more manageable compared to a 2BR unit. 2. **Seek Out-of-Voucher Opportunities**: Due to the tight rental market, investors might explore opportunities outside the Section 8 program. They could target higher-income renters who do not rely on government assistance. This approach could provide better rental yields and reduce the administrative burden associated with managing Section 8 units. 3. **Consider Long-Term Appreciation**: While the short-term cash flow might be negative, investors should consider the long-term appreciation potential of properties in Naperville. The high median household income and strong demand for housing suggest that property values could increase over time, providing capital gains even if the immediate rental income is insufficient. #### Bottom Line Based on the provided data, the recommendation for Section 8-focused investors in ZIP code 60540 is to **skip** this market. The high price-to-FMR ratio and tight rental market make it challenging to achieve positive cash flow. Instead, investors might want to look for areas with a more favorable price-to-FMR ratio or where there is a larger proportion of renters who are less dependent on government assistance. If investors decide to proceed, they should focus on smaller units and consider the potential for long-term appreciation rather than relying solely on rental income.

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.