Section 8 Fair Market Rent (FMR) for ZIP 78537 - 2027

Investment Score for ZIP 78537

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	$800
1 Bedroom	$800
2 Bedrooms	$1,010
3 Bedrooms	$1,310
4 Bedrooms	$1,440
5 Bedrooms	$1,670
6 Bedrooms	$1,870
7 Bedrooms	$2,020
8 Bedrooms	$2,121

Investment Analysis by Bedroom Size

Zillow median home prices vs Section 8 FMR rates (Data: 2026-08-31)

Bedrooms	Monthly FMR	Median Price	1% Rule	Grade
1BR	$800	$98,955	0.81%	C
2BR	$1,010	$118,455	0.85%	C
3BR	$1,310	$167,769	0.78%	D
4BR	$1,440	$251,467	0.57%	F
5BR	$1,670	$311,551	0.54%	F

Demographics & Housing Statistics

U.S. Census Bureau data (2024)

### Market Analysis for ZIP Code 78537 (Donna, TX) #### Section 8 Voucher Dynamics The Fair Market Rent (FMR) for ZIP code 78537 in Donna, Texas, is set by HUD for 2026. For a two-bedroom unit, the FMR is $970, which represents 28.6% of the median household income in the area. However, the actual rent for a two-bedroom unit can be significantly higher. According to Zillow, the median price for a two-bedroom rental property is $118,276, which translates to a monthly rent of approximately $985.64 based on typical mortgage payments and financing terms. This means that the actual rent is slightly above the FMR, creating a constraint for voucher holders who may struggle to find units within their budget. The FMR for other bedroom types are as follows: - 0BR: $770 - 1BR: $780 - 3BR: $1260 - 4BR: $1400 Given that the actual rents are close to or above the FMR, it suggests that there is limited flexibility for landlords to accept Section 8 vouchers without facing financial strain. #### Affordability & Renter Profile ZIP code 78537 has a population of 51,426, with 25.8% of residents being renters. The occupancy rate stands at 84.5%, indicating that the housing market is relatively tight but not overly saturated. Given the median household income of $40,668, affordability is a significant concern for many residents. The FMR for a two-bedroom unit at $970 is already a substantial portion of the median income, making it challenging for low-income families to afford housing without assistance. The price-to-FMR ratio of 10.2x for a two-bedroom unit further underscores the affordability issue. This ratio implies that the cost of purchasing a two-bedroom home is over ten times the monthly rent, which is unusually high and suggests that the local real estate market might be experiencing some distortions due to factors such as speculative buying or limited supply. #### Investor Angle From an investor perspective, the ZIP code 78537 presents a mixed picture. The FMR for a two-bedroom unit is $970, while the actual median rent is around $985.64. This slight premium over the FMR could still allow for a modest cash flow if investors manage expenses effectively. However, the high price-to-FMR ratio of 10.2x indicates that the purchase price of properties is much higher relative to their rental value, which could negatively impact the return on investment. To determine the investment grade, we need to consider several factors including the vacancy rate, competition, and demand. With an occupancy rate of 84.5%, the vacancy rate is 15.5%. This suggests that there is some room for new rentals but also indicates that the market is not oversupplied. The high rent-to-income ratio and the fact that 25.8% of residents are renters suggest a strong demand for affordable housing, which could benefit investors focusing on Section 8 vouchers. However, the high price-to-FMR ratio is a red flag. It implies that the purchase cost of properties is disproportionately high compared to their rental potential, which could lead to lower returns and increased risk. Additionally, the limited flexibility in rent pricing due to the proximity of actual rents to FMRs could make it difficult to attract tenants who are not voucher holders. #### Specific Actionable Insights 1. **Focus on Properties Below FMR**: Investors should seek out properties where the rent is below the FMR, particularly for two-bedroom units. For example, finding a two-bedroom unit that can be rented for $950 or less would ensure compliance with Section 8 guidelines and potentially provide a better cash flow. 2. **Consider Smaller Units**: Given the high price-to-FMR ratio, smaller units like one-bedroom apartments might offer a better investment opportunity. The FMR for a one-bedroom unit is $780, which is significantly lower than the median rent for a two-bedroom unit. This could help reduce the overall investment cost and improve the likelihood of attracting voucher holders. 3. **Evaluate Long-Term Rental Potential**: While the immediate cash flow might be modest, investors should also consider the long-term rental potential. If the occupancy rate remains stable and demand for affordable housing continues to grow, the investment could become more profitable over time. #### Bottom Line For Section 8-focused investors, the recommendation for ZIP code 78537 is to **Hold**. The high price-to-FMR ratio and the tightness of the market suggest that while there is demand for affordable housing, the current purchase prices may not justify the investment given the limited upside in rental rates. Investors should carefully evaluate individual properties and focus on those that offer rents below the FMR, especially for smaller units, to maximize their chances of attracting voucher holders and achieving a positive cash flow. However, the overall market conditions indicate that caution is warranted, and a thorough due diligence process is essential before committing to any investments.

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.