Location: Denver-Aurora-Centennial, CO | Metro: Denver-Aurora-Centennial, CO MSA
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 | $1,560 |
| 1 Bedroom | $1,630 |
| 2 Bedrooms | $1,930 |
| 3 Bedrooms | $2,530 |
| 4 Bedrooms | $2,830 |
| 5 Bedrooms | $3,283 |
| 6 Bedrooms | $3,677 |
| 7 Bedrooms | $3,971 |
| 8 Bedrooms | $4,170 |
Zillow median home prices vs Section 8 FMR rates (Data: 2026-08-31)
| Bedrooms | Monthly FMR | Median Price | 1% Rule | Grade |
|---|---|---|---|---|
| 1BR | $1,630 | $243,646 | 0.67% | D |
| 2BR | $1,930 | $380,251 | 0.51% | F |
| 3BR | $2,530 | $530,611 | 0.48% | F |
| 4BR | $2,830 | $596,797 | 0.47% | F |
| 5BR | $3,283 | $642,311 | 0.51% | F |
U.S. Census Bureau data (2024)
A skeptical investor might question whether the Fair Market Rent (FMR) of $2,050 for ZIP code 80226 in Lakewood, Colorado, can sufficiently cover the mortgage on a home priced at $556,094. The FMR represents the maximum amount that a household earning 50% of the area median income can pay for rent without spending more than 30% of their income. To address this concern, one must consider the typical mortgage payments for a home in this price range. According to recent data, a mortgage payment on a house costing $556,094 could be around $2,500 per month, depending on interest rates and down payment. This means the FMR does not fully cover the mortgage, but it's important to note that FMR is not the only factor; landlords can charge more if they choose.
The investor might also doubt the level of rental demand in the area, given that only 47.9% of households are renters. While this percentage indicates a lower proportion of renters compared to other areas, it still represents a significant number of potential tenants. In ZIP 80226, this translates into over 10,000 renter households. Additionally, the demand for rentals can be influenced by factors such as job growth, population trends, and the overall cost of living, which are not directly addressed by the percentage alone. Therefore, while the renter percentage is relatively low, the absolute number of renters suggests a viable market.
A final objection could be whether Section 8 vouchers will keep up with the market rents, currently at $1,853. The voucher program aims to subsidize housing costs for low-income families, ensuring that they do not spend more than 30% of their income on rent. However, the data does not provide a direct comparison between voucher amounts and market rents. It's known that voucher amounts are adjusted periodically based on local market conditions, but the exact figure for ZIP 80226 is not available. Landlords should monitor local HUD announcements and work closely with the Lakewood Housing Authority to stay informed about any changes in voucher amounts.
In summary, while the FMR of $2,050 does not fully cover the mortgage on a home priced at $556,094, the market allows for higher rents. The rental demand, though not overwhelming at 47.9%, is substantial. Lastly, although the data does not show a direct correlation between voucher amounts and market rents, staying updated with local adjustments ensures landlords remain competitive in the rental 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.