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 |
|---|---|---|---|---|
| 1BR | $900 | $60,660 | 1.48% | A |
| 2BR | $1,120 | $82,798 | 1.35% | A |
| 3BR | $1,440 | $141,691 | 1.02% | B |
| 4BR | $1,490 | $183,829 | 0.81% | C |
U.S. Census Bureau data (2024)
A skeptical investor might question whether the Fair Market Rent (FMR) of $1,010 for ZIP 76704 in fiscal year 2024 will adequately cover the mortgage on a median-priced home valued at $112,727. To evaluate this, let's consider the current mortgage rates. A typical 30-year fixed-rate mortgage in the USA averages around 6%, which would result in a monthly payment of approximately $660 for a home priced at $112,727, assuming a 20% down payment. This means that the FMR of $1,010 can indeed cover the mortgage payment comfortably, leaving a margin for maintenance and other expenses.
The investor may also be concerned about the renter demand in Waco, TX, which stands at 68.4%. While this percentage indicates that a significant portion of residents are renters, it does not directly reflect the competition among landlords. However, the presence of multiple apartment listings on platforms such as RentCafe suggests a robust rental market, which should support demand for Section 8 properties. It's important to note that the high percentage of renters could indicate a strong reliance on affordable housing options, including those supported by Section 8 vouchers.
Another objection could be whether Section 8 vouchers will keep pace with the market rents of $1,232. The data provided by the Waco Housing Authority shows that the Section 8 program is managed according to HUD guidelines, but it does not specify the exact voucher amounts. Given the discrepancy between the FMR and the market rent, landlords should expect some negotiation with tenants regarding the difference. However, the stability of the rental market in Waco, with its family-focused environment and steady growth, suggests that vouchers are likely to maintain their relevance, though they may not always fully cover the higher market rents.
In summary, while the FMR of $1,010 is sufficient to cover mortgage payments on a median-priced home, the renter demand at 68.4% is indicative of a strong need for affordable housing. Section 8 vouchers are expected to continue providing support, although they may not always match the full market rent of $1,232. Landlords and investors must balance these factors when considering investments in ZIP 76704.
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.