Section 8 Fair Market Rent (FMR) for ZIP 62040 - 2027

Investment Score for ZIP 62040

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	$900
1 Bedroom	$930
2 Bedrooms	$1,140
3 Bedrooms	$1,460
4 Bedrooms	$1,690
5 Bedrooms	$1,960
6 Bedrooms	$2,195
7 Bedrooms	$2,371
8 Bedrooms	$2,490

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	$930	$67,716	1.37%	A
2BR	$1,140	$89,762	1.27%	A
3BR	$1,460	$142,420	1.03%	B
4BR	$1,690	$171,235	0.99%	C
5BR	$1,960	$155,900	1.26%	A

Demographics & Housing Statistics

U.S. Census Bureau data (2024)

### Market Analysis for ZIP Code 62040 (Granite City, MO) #### Section 8 Voucher Dynamics The Fair Market Rent (FMR) for ZIP code 62040 is set by HUD for the year 2026. The FMRs are as follows: - 0BR: $820 - 1BR: $850 - 2BR: $1040 - 3BR: $1340 - 4BR: $1550 These figures represent the maximum amount that a Section 8 voucher holder can be reimbursed for rent. However, the actual rents in the area may differ significantly. For instance, the Zillow median price for a 2BR property is $85,912, which is 6.9 times the FMR for a 2BR unit. This high price-to-FMR ratio suggests that actual rental prices could be much higher than the FMRs, potentially creating a challenge for voucher holders who must find housing within their reimbursement limits. Given that the FMR for a 2BR unit is $1040, which is only 20.8% of the median household income ($60,031), it is clear that many residents would struggle to afford market-rate rents without assistance. Therefore, voucher holders might face difficulties finding suitable housing within the FMR limits, especially if landlords are charging above these rates. #### Affordability & Renter Profile The population of Granite City, MO, is 40,404, with 25.0% of households being renters. The occupancy rate is 91.0%, indicating a relatively tight rental market. With a median household income of $60,031, the cost of living is moderate, but the high price-to-FMR ratio for 2BR units suggests that the market is skewed towards higher-end rentals. This could mean that there is less affordable housing available, particularly for low-income families who rely on Section 8 vouchers. The high occupancy rate and the fact that 25% of households are renters suggest that the demand for rental properties is strong. However, the affordability issue becomes apparent when considering that the FMR for a 2BR unit represents just over one-fifth of the median income. This implies that the market is likely to be competitive for lower-income renters, and they may have limited options unless they can find units priced at or below the FMR. #### Investor Angle From an investor perspective, the ZIP code 62040 presents both opportunities and challenges. The FMRs provide a baseline for what tenants with Section 8 vouchers can pay, but the actual rents could be much higher due to the tight market conditions and the high price-to-FMR ratio. To determine whether this ZIP code is cash-flow positive at FMR, we need to consider the typical costs associated with owning and managing rental properties. These include mortgage payments, property taxes, insurance, maintenance, and other operational expenses. Assuming a conservative estimate of 75% of the FMR covering all these costs, the break-even point for a 2BR unit would be around $780 per month. Given that the FMR for a 2BR unit is $1040, there is potential for positive cash flow if the property is managed efficiently. However, the investment grade depends on several factors, including the local real estate market trends, vacancy rates, and the overall economic stability of the area. The high occupancy rate of 91.0% suggests that there is a strong demand for rental properties, which could support steady occupancy and rental income. On the other hand, the high price-to-FMR ratio indicates that the market is not aligned with the FMRs, which could make it challenging to attract voucher holders. #### Specific Actionable Insights 1. **Focus on Units Below FMR**: Investors should focus on acquiring or developing properties that are priced below the FMRs. For example, a 2BR unit priced at $950 per month would still be attractive to voucher holders while providing a margin for positive cash flow. This strategy would help mitigate the risk of vacancy and ensure a steady stream of income. 2. **Consider Smaller Units**: Given the high price-to-FMR ratio for larger units, investors might want to consider smaller units such as 0BR or 1BR apartments. These units have FMRs of $820 and $850 respectively, which are more likely to align with the actual rental prices in the area. Additionally, smaller units tend to have higher demand and lower vacancy rates. 3. **Develop Relationships with Local Agencies**: To increase the likelihood of attracting voucher holders, investors should develop relationships with local housing authorities and social service agencies. These organizations can help connect landlords with eligible tenants and streamline the application process. #### Bottom Line For Section 8-focused investors, the recommendation for ZIP code 62040 is to **Hold**. While there is potential for positive cash flow, the high price-to-FMR ratio and the tight rental market suggest that finding and retaining tenants who use Section 8 vouchers will be challenging. Investors should carefully evaluate the local market dynamics and consider strategies to make their properties more attractive to voucher holders, such as pricing below the FMR and focusing on smaller units. Developing strong relationships with local agencies can also improve the chances of success in this market.

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.