Location: Waco, TX | Metro: Waco, 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 | $770 |
| 1 Bedroom | $900 |
| 2 Bedrooms | $1,120 |
| 3 Bedrooms | $1,440 |
| 4 Bedrooms | $1,490 |
| 5 Bedrooms | $1,728 |
| 6 Bedrooms | $1,935 |
| 7 Bedrooms | $2,090 |
| 8 Bedrooms | $2,195 |
Zillow median home prices vs Section 8 FMR rates (Data: 2026-07-31)
| Bedrooms | Monthly FMR | Median Price | 1% Rule | Grade |
|---|---|---|---|---|
| 2BR | $1,120 | $136,349 | 0.82% | C |
| 3BR | $1,440 | $266,671 | 0.54% | F |
| 4BR | $1,490 | $451,517 | 0.33% | F |
U.S. Census Bureau data (2024)
A skeptical investor looking into ZIP 76640 in Texas might have several concerns regarding the viability of investing in rental properties through the Section 8 program. Let's address these concerns using available data.
Will Fair Market Rent (FMR) of $1160 cover the mortgage on a $223,662 home?
The FMR of $1160 for ZIP 76640 in fiscal year 2024 needs to be evaluated against the mortgage cost of a $223,662 home. Assuming a 30-year fixed-rate mortgage at an average rate of 4.5%, the monthly mortgage payment would be approximately $1,090. This figure does not include property taxes, insurance, and maintenance costs, which can add another $300-$400 per month. Therefore, the FMR alone would not fully cover the total monthly expenses of owning a home in this price range. However, it's important to note that the FMR is intended to cover only the housing cost component, and additional income from other sources could help bridge the gap.
Is there enough renter demand at 16.8%?
The rental demand in ZIP 76640 is indicated by the 16.8% of households that rent their homes. While this percentage might seem low, it is important to consider the overall population and household numbers. A higher percentage of renters would be ideal, but the demand is present and should be sufficient to fill vacancies. It's also worth noting that the percentage of renters does not directly correlate to the demand for Section 8 properties; the demand for such properties is often driven by the availability of affordable housing options.
Will vouchers keep pace with $838 market rents?
The current market rent of $838 in ZIP 76640 is below the FMR of $1160, suggesting that the voucher amount should generally cover the market rent. However, whether vouchers will keep pace with increasing market rents depends on HUD's annual adjustments to the FMR. If the FMR remains stable or increases at a slower rate than market rents, landlords may face challenges in maintaining profitability. The data does not provide projections for future FMR adjustments, so caution is advised when considering long-term investments based solely on voucher payments.
In conclusion, while the data shows some potential challenges, particularly with covering mortgage costs and keeping pace with market rents, there is still a viable opportunity for landlords and small-portfolio investors in ZIP 76640. Careful consideration of the total cost of ownership and understanding the dynamics of the local rental market will be crucial in making informed investment decisions.
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.