Section 8 Fair Market Rent (FMR) for ZIP 63368 - 2027

Investment Score for ZIP 63368

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	$1,390
1 Bedroom	$1,440
2 Bedrooms	$1,760
3 Bedrooms	$2,260
4 Bedrooms	$2,610
5 Bedrooms	$3,028
6 Bedrooms	$3,391
7 Bedrooms	$3,662
8 Bedrooms	$3,845

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	$1,760	$290,361	0.61%	D
3BR	$2,260	$369,992	0.61%	D
4BR	$2,610	$492,580	0.53%	F
5BR	$3,028	$591,497	0.51%	F

Demographics & Housing Statistics

U.S. Census Bureau data (2024)

### Market Analysis for ZIP Code 63368 (O'Fallon, MO) #### Section 8 Voucher Dynamics The Fair Market Rent (FMR) for O'Fallon, MO, in ZIP code 63368, as of 2026, is set at $1570 for a two-bedroom unit. This figure represents 15.2% of the median household income of $124,297, which suggests that it is reasonably aligned with the local economic conditions. However, the actual rent for a two-bedroom unit in this area, according to Zillow, is $287,789, which translates to a price-to-FMR ratio of 15.3x. This indicates that the actual rental prices are significantly higher than the FMR, creating a substantial gap between what voucher holders can afford and the market rates. For instance, a three-bedroom unit has an FMR of $2020, but the actual rental prices could be much higher, leading to affordability issues for those relying on Section 8 vouchers. #### Affordability & Renter Profile Given that only 18.0% of the population are renters, the rental market in O'Fallon is relatively small compared to the overall housing market. The occupancy rate of 98.1% suggests that there is a high demand for rental properties, indicating a tight market. This tightness is further exacerbated by the significant disparity between the FMR and the actual rental prices. The median household income of $124,297 implies that most residents are homeowners who can afford to purchase rather than rent. Consequently, the typical renter in this area likely has a lower income relative to the median, making it challenging for them to find affordable housing without assistance. The FMR for a two-bedroom unit at $1570 is well below the median income, but it is still far from the actual rental prices, highlighting the need for subsidies to make housing affordable for low-income families. #### Investor Angle From an investor perspective, the ZIP code 63368 presents a mixed picture. While the median household income is high, the rental market is constrained by the limited number of renters and the high actual rental prices. If an investor were to focus solely on Section 8 voucher holders, they would need to ensure that their rental units are priced at or below the FMR to attract these tenants. Given the FMR for a two-bedroom unit is $1570, and the actual rental price is $287,789, the potential cash flow from renting to voucher holders would be significantly lower than what could be achieved by renting to the general market. However, the high occupancy rate of 98.1% suggests that there is strong demand for rental properties, even if the prices are higher than the FMR. Investors should consider the broader rental market dynamics and potentially target a mix of Section 8 voucher holders and other renters who might be willing to pay more. The investment grade in this area would likely be moderate due to the high competition and the need to balance pricing between the FMR and market rates. #### Specific Actionable Insights 1. **Target Mixed-Income Rentals**: Investors should consider developing or acquiring properties that cater to both Section 8 voucher holders and other renters. By offering a range of units at different price points, they can maximize their occupancy and cash flow. For example, a property with some units priced at $1570 (FMR for 2BR) and others slightly above this level could attract a diverse tenant base. 2. **Focus on Smaller Units**: Given the high price-to-FMR ratio, smaller units such as one-bedroom apartments might be more attractive to voucher holders. The FMR for a one-bedroom unit is $1280, which is still a fraction of the median household income. Investing in properties with a higher proportion of one-bedroom units could help capture a larger share of the rental market. #### Bottom Line For Section 8-focused investors, the recommendation is to **Skip** this ZIP code unless they can develop or acquire properties that offer a mix of income levels and smaller units. The high actual rental prices and the limited number of renters make it challenging to achieve positive cash flow solely through Section 8 vouchers. However, if investors can diversify their tenant base and offer a range of units, they might find opportunities to enter this market profitably. Otherwise, the tight rental market and high competition suggest that focusing on areas with a higher percentage of renters and lower actual rental prices would be more advantageous.

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.