Location: Colorado Springs, CO | Metro: Colorado Springs, CO 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 | $1,370 |
| 1 Bedroom | $1,680 |
| 2 Bedrooms | $1,970 |
| 3 Bedrooms | $2,730 |
| 4 Bedrooms | $3,130 |
| 5 Bedrooms | $3,631 |
| 6 Bedrooms | $4,067 |
| 7 Bedrooms | $4,392 |
| 8 Bedrooms | $4,612 |
Zillow median home prices vs Section 8 FMR rates (Data: 2026-08-31)
| Bedrooms | Monthly FMR | Median Price | 1% Rule | Grade |
|---|---|---|---|---|
| 2BR | $1,970 | $309,967 | 0.64% | D |
| 3BR | $2,730 | $438,364 | 0.62% | D |
| 4BR | $3,130 | $528,488 | 0.59% | F |
| 5BR | $3,631 | $612,038 | 0.59% | F |
U.S. Census Bureau data (2024)
A skeptical investor might question whether the Fair Market Rent (FMR) of $2,200 for ZIP 80920 in Colorado Springs, CO, for fiscal year 2024, will sufficiently cover the mortgage on a home valued at $524,037. According to recent mortgage rates, a fixed-rate mortgage for a 30-year term currently stands at around 6.5%. This translates to a monthly mortgage payment of approximately $3,150, which is significantly higher than the FMR. Therefore, relying solely on the FMR would not cover the mortgage on such a property.
The investor could also raise concerns about the rental market's strength, given that only 34.6% of properties are rented. However, the average rent in Colorado Springs, CO, is $1,950, indicating a robust rental market. Despite the lower percentage of rented properties, the demand for rental units remains strong, supporting the viability of renting out homes in this area.
Another objection might be whether the Section 8 voucher program will keep up with the market rents of $1,947. While the voucher program aims to help low-income individuals find affordable housing, the specific funding levels for ZIP 80920 are not explicitly detailed. The program typically adjusts its funding based on local market conditions, but the exact amount may vary. For instance, the voucher may cover a portion of the rent and utilities, leaving the tenant to pay the remainder. Thus, while the program does provide support, it may not fully cover the market rent, requiring the tenant to contribute additional funds.
In conclusion, while ZIP 80920 presents opportunities in the rental market, investors must consider the limitations posed by the FMR and the specifics of the Section 8 voucher program. It is crucial to conduct thorough due diligence and possibly seek additional sources of income to ensure financial stability.
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.