Location: Dallas, TX | Metro: Dallas, TX HUD Metro FMR Area
Based on 1% Rule: A+ (≥1.5%) | A (≥1.2%) | B (≥1.0%) | C (≥0.8%) | D (≥0.6%) | F (<0.6%)
| Unit Size | Monthly FMR |
|---|---|
| Studio | $1,270 |
| 1 Bedroom | $1,310 |
| 2 Bedrooms | $1,540 |
| 3 Bedrooms | $1,940 |
| 4 Bedrooms | $2,460 |
| 5 Bedrooms | $2,854 |
| 6 Bedrooms | $3,196 |
| 7 Bedrooms | $3,452 |
| 8 Bedrooms | $3,625 |
Zillow median home prices vs Section 8 FMR rates (Data: 2026-08-31)
| Bedrooms | Monthly FMR | Median Price | 1% Rule | Grade |
|---|---|---|---|---|
| 1BR | $1,310 | $71,381 | 1.84% | A+ |
| 2BR | $1,540 | $305,181 | 0.5% | F |
| 3BR | $1,940 | $479,160 | 0.4% | F |
| 4BR | $2,460 | $1,341,610 | 0.18% | F |
| 5BR | $2,854 | $3,091,883 | 0.09% | F |
U.S. Census Bureau data (2024)
The Section 8 cap rate scenario for ZIP 75220 in Dallas, TX, reveals some interesting insights when comparing the annualized Fair Market Rent (FMR) and Zillow's Observed Rent Index (ZORI).
The annualized FMR for a two-bedroom property in ZIP 75220 is $1540 per month, equating to an annual rent of $18,480. Given the median home value of $510,325, this translates into an implied gross yield of approximately 3.6%. The calculation is straightforward: divide the annual rent by the median home value ($18,480 / $510,325 = 0.0362 or 3.6%).
On the other hand, the ZORI for a two-bedroom property stands at $1,508 per month, resulting in an annual rent of $18,096. Using the same median home value, this yields an implied gross yield of roughly 3.55%. The computation follows the same logic: annual rent divided by median home value ($18,096 / $510,325 = 0.0355 or 3.55%).
Considering the renter density of 68.1%, it becomes evident that the rental market in ZIP 75220 is quite robust. However, the lack of days-on-market (DOM) data complicates the analysis of how quickly properties can be leased. Despite this limitation, the gross yield based on FMR appears slightly more favorable, at 3.6%, compared to the ZORI-based yield of 3.55%. This suggests that landlords participating in the Section 8 program might see a marginally higher return on investment.
Given the high renter density, it is reasonable to assume that the demand for rental properties, including those under the Section 8 program, is strong. Therefore, the FMR-based gross yield of 3.6% is likely more reflective of the actual rental income potential in ZIP 75220. However, investors should consider the administrative complexities and potential risks associated with the Section 8 program before making any decisions.
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.