Section 8 Fair Market Rent (FMR) for ZIP 78704 - 2027

Investment Score for ZIP 78704

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	$1,630
1 Bedroom	$1,730
2 Bedrooms	$2,050
3 Bedrooms	$2,590
4 Bedrooms	$3,030
5 Bedrooms	$3,515
6 Bedrooms	$3,937
7 Bedrooms	$4,252
8 Bedrooms	$4,465

Investment Analysis by Bedroom Size

Zillow median home prices vs Section 8 FMR rates (Data: 2026-07-31)

Bedrooms	Monthly FMR	Median Price	1% Rule	Grade
1BR	$1,730	$333,908	0.52%	F
2BR	$2,050	$554,923	0.37%	F
3BR	$2,590	$889,703	0.29%	F
4BR	$3,030	$1,477,956	0.21%	F
5BR	$3,515	$2,067,846	0.17%	F

Demographics & Housing Statistics

U.S. Census Bureau data (2024)

### Market Analysis for ZIP Code 78704 (Austin, TX) #### Section 8 Voucher Dynamics The Fair Market Rent (FMR) for ZIP code 78704 in Austin, Texas, is set by HUD for the year 2026. According to the provided data, the FMRs are as follows: - 0BR: $1670 - 1BR: $1770 - 2BR: $2100 (which represents 23.6% of the median household income) - 3BR: $2660 - 4BR: $3130 These figures represent the maximum amount that a Section 8 voucher holder can pay for rent. However, the actual rents in the area are significantly higher. For instance, the Zillow median price for a 2BR unit is $551,211, which translates to a monthly rental cost of approximately $4593 based on typical mortgage rates and property taxes. This means that the actual rent for a 2BR unit is about 21.9 times the FMR, making it extremely challenging for voucher holders to find suitable housing within their budget. Given these constraints, voucher holders in ZIP 78704 face significant challenges in securing affordable housing. The disparity between the FMR and actual rents suggests that landlords who accept Section 8 vouchers must be willing to operate below market rates, which could limit their pool of potential tenants. #### Affordability & Renter Profile ZIP code 78704 has a population of 50,688, with 67.0% of residents being renters. This indicates a strong demand for rental properties in the area. The occupancy rate of 93.1% further supports the notion that the market is tight, with very few vacant units available. The median household income in the area is $106,897, which is relatively high. Despite this, the affordability issue is starkly evident when considering that the FMR for a 2BR unit is only $2100, representing just 23.6% of the median income. This suggests that the majority of residents in ZIP 78704 are paying much more than 23.6% of their income in rent, indicating a highly competitive and expensive rental market. Given the high percentage of renters and the limited supply of affordable units, the market is likely to remain tight. This makes it difficult for low-income individuals to find housing that fits within their budget, especially those relying on Section 8 vouchers. #### Investor Angle From an investor perspective, the ZIP code 78704 presents a mixed picture. The FMRs are significantly lower than the actual market rents, which means that operating at FMR levels would result in a substantial loss compared to market rates. For example, a 2BR unit with a Zillow median price of $551,211 would have a monthly mortgage payment of around $4593, while the FMR is only $2100. This implies that the cash flow would be negative if the investor were to operate strictly within the FMR guidelines. However, there might still be opportunities for investors who are willing to accept Section 8 vouchers. These investors would need to consider the long-term benefits of stable, government-backed rental income, even though it is below market rates. Additionally, the high demand for rental properties in the area could provide a steady stream of tenants, reducing vacancy risks. In terms of investment grade, ZIP 78704 would likely be rated as moderate to high risk due to the significant gap between FMR and market rents. Investors should carefully evaluate the financial implications and ensure they have a solid understanding of the local rental market dynamics before committing to such investments. #### Specific Actionable Insights 1. **Focus on Smaller Units**: Given the high cost of larger units, investors should consider focusing on smaller units like 0BR and 1BR apartments. These units have FMRs of $1670 and $1770 respectively, which are closer to the actual market rents for smaller units. This could help mitigate some of the financial risks associated with operating at FMR levels. 2. **Consider Mixed-Income Developments**: To balance the financial risks, investors might want to explore mixed-income developments where a portion of the units are rented at market rates and the rest are rented to Section 8 voucher holders. This approach can help stabilize cash flows and reduce the overall financial burden. 3. **Evaluate Long-Term Benefits**: While operating at FMR levels may not be financially viable in the short term, investors should consider the long-term benefits of stable rental income and reduced vacancy risks. The high demand for rental properties in ZIP 78704 could make this a worthwhile investment over time. #### Bottom Line For Section 8-focused investors, the recommendation for ZIP code 78704 is to **Skip**. The significant gap between FMR and actual market rents makes it difficult to achieve positive cash flow, and the high demand for rental properties suggests that the market is already tight. Investors looking to enter this market should carefully weigh the financial risks and consider alternative strategies or ZIP codes where the gap between FMR and market rents is less pronounced. In summary, while there is a strong demand for rental properties in ZIP 78704, the high costs and limited availability of affordable units make it a challenging environment for Section 8-focused investors.

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.