Location: Erath County, TX | Metro: Erath County, TX
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 | $880 |
| 1 Bedroom | $960 |
| 2 Bedrooms | $1,260 |
| 3 Bedrooms | $1,740 |
| 4 Bedrooms | $1,930 |
| 5 Bedrooms | $2,239 |
| 6 Bedrooms | $2,508 |
| 7 Bedrooms | $2,709 |
| 8 Bedrooms | $2,844 |
Zillow median home prices vs Section 8 FMR rates (Data: 2026-07-31)
| Bedrooms | Monthly FMR | Median Price | 1% Rule | Grade |
|---|---|---|---|---|
| 2BR | $1,260 | $203,274 | 0.62% | D |
| 3BR | $1,740 | $308,357 | 0.56% | F |
| 4BR | $1,930 | $441,454 | 0.44% | F |
U.S. Census Bureau data (2024)
The Section 8 market analysis for ZIP code 76401 in Stephenville, Texas, reveals key insights for landlords and small-portfolio investors. The HUD Fair Market Rent (FMR) for the Erath County metro area in fiscal year 2026 is set at $1,170. In comparison, the market rent, as measured by the Zillow Observed Rent Index (ZORI), stands at $1,526. This indicates that voucher tenants will only cashflow in premium units, as the FMR is significantly lower than the current market rent.
To further understand the investment potential, consider the median home value in ZIP 76401, which is $323,631. Using this figure, we can calculate the rent-to-price ratio. A property priced at $323,631 would need to generate approximately $1,349 in monthly rent to maintain a standard rent-to-price ratio, assuming a 4% annual yield. However, given the HUD FMR of $1,170, it is evident that landlords relying solely on Section 8 vouchers will struggle to achieve positive cash flow without offering higher-end units.
The rental market's dynamics also provide additional context. The median Days on Market (DOM) for rentals is 57 days, indicating a relatively quick turnover. Additionally, the share of listings that required a price cut is just 0.2%, suggesting a robust rental demand. These factors imply that while cash flow might be challenging, the stability and demand for rental properties remain strong.
In summary, the strongest investor angle in ZIP 76401 is stability, due to the consistent rental demand and low rate of price cuts. Despite the challenge of achieving positive cash flow with standard Section 8 units, the market's fundamentals support long-term investment strategies focused on maintaining a steady stream of tenants.
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.