Location: Mason County, TX | Metro: Kendall County, 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 | $1,210 |
| 1 Bedroom | $1,220 |
| 2 Bedrooms | $1,600 |
| 3 Bedrooms | $1,960 |
| 4 Bedrooms | $2,300 |
| 5 Bedrooms | $2,668 |
| 6 Bedrooms | $2,988 |
| 7 Bedrooms | $3,227 |
| 8 Bedrooms | $3,388 |
Zillow median home prices vs Section 8 FMR rates (Data: 2026-08-31)
| Bedrooms | Monthly FMR | Median Price | 1% Rule | Grade |
|---|---|---|---|---|
| 2BR | $1,600 | $431,466 | 0.37% | F |
| 3BR | $1,960 | $501,988 | 0.39% | F |
| 4BR | $2,300 | $695,032 | 0.33% | F |
U.S. Census Bureau data (2024)
In evaluating the investment potential of ZIP code 78624, located in Fredericksburg, TX, several key concerns arise regarding the feasibility of renting properties under the Section 8 program. One primary objection is whether the Fair Market Rent (FMR) of $1,360 for the fiscal year 2024 will sufficiently cover the mortgage on a property valued at $515,498. To address this, it's crucial to consider the typical mortgage rates and terms. Assuming a 30-year fixed-rate mortgage at an average rate of 4%, the monthly payment on a $515,498 home would be approximately $2,495. This figure exceeds the FMR, indicating that relying solely on FMR may not cover the mortgage expenses. However, landlords can mitigate this risk by considering lower-cost homes within the area or by securing additional rental income from other sources.
A second objection pertains to the level of renter demand in the area, which stands at 26.3%. This percentage suggests a moderate demand for rentals but falls short of high-demand areas, which might typically exceed 30%. Despite this, Fredericksburg's charm and its status as a desirable location could attract steady rental interest. The demand for affordable housing remains robust, and the town's growing population indicates potential for sustained interest in rental properties. While the data does not provide a comprehensive picture of the local rental market dynamics, the presence of a significant number of renters points towards a viable opportunity for those willing to invest in the area.
The final concern centers around the adequacy of Section 8 vouchers to meet the market rent of $2,313. Given that the FMR is significantly lower than the market rent, there is a risk that vouchers may not fully compensate for the cost of renting out a property at market rates. This discrepancy means that landlords may need to consider setting their rent closer to the FMR or finding ways to balance their costs against the voucher amount. It's also important to note that while vouchers might not cover the entire rent, they often come with less risk of default and can offer a stable source of income compared to private tenants. The challenge here is aligning expectations with the realities of the local rental market and the federal guidelines for FMR.
In summary, investing in ZIP code 78624 under the Section 8 program presents clear challenges, particularly concerning the gap between FMR and mortgage payments, as well as the relationship between voucher amounts and market rents. However, the town's appeal and the ongoing demand for affordable housing make it a worthwhile consideration for investors prepared to navigate these complexities. The data highlights the importance of careful planning and a realistic assessment of financial projections when entering this market.
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.