Section 8 Fair Market Rent (FMR) for ZIP 85035 - 2027

Investment Score for ZIP 85035

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	$1,200
1 Bedroom	$1,290
2 Bedrooms	$1,500
3 Bedrooms	$1,980
4 Bedrooms	$2,190
5 Bedrooms	$2,540
6 Bedrooms	$2,845
7 Bedrooms	$3,073
8 Bedrooms	$3,227

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
2BR	$1,500	$273,558	0.55%	F
3BR	$1,980	$324,613	0.61%	D
4BR	$2,190	$345,294	0.63%	D
5BR	$2,540	$366,052	0.69%	D

Demographics & Housing Statistics

U.S. Census Bureau data (2024)

### Market Analysis for ZIP Code 85035 (Phoenix, AZ) #### Section 8 Voucher Dynamics The Fair Market Rent (FMR) for ZIP code 85035 is set by HUD for 2026. For a two-bedroom unit, the FMR is $1590. This figure represents 31.6% of the median household income in the area, which stands at $60,440. However, the actual rental market in Phoenix, particularly in this ZIP code, is significantly higher. According to Zillow, the median price for a two-bedroom rental property is $280,035, which translates into a monthly rent of approximately $2333.63 based on typical mortgage payments and rental yields. This means that the actual rent is nearly 1.5x the FMR, specifically 1.47x when calculated using the price-to-FMR ratio of 14.7x. This disparity creates significant constraints for voucher holders. They would need to find properties where landlords accept the lower FMR rates, or they might have to supplement their voucher amount with additional personal funds to cover the difference between the FMR and the actual market rent. Given that the occupancy rate is 97.0%, it suggests that there is limited vacancy, making it harder for voucher holders to secure housing at or below FMR levels. #### Affordability & Renter Profile With 53.4% of the population being renters, the ZIP code 85035 has a substantial demand for rental housing. The median household income of $60,440 indicates that the majority of residents are middle-income earners. However, the high actual rental costs relative to FMR suggest that affordability is a major issue. A two-bedroom unit's actual rent of around $2333.63 would consume about 45.4% of the median household income, far exceeding the 30% threshold typically considered affordable. Given the high occupancy rate and the significant gap between FMR and actual rents, this is likely a tight market with limited options for low-income renters. Landlords may prefer higher-paying tenants who can afford the actual market rates, leading to a challenging environment for those relying solely on Section 8 vouchers. #### Investor Angle From an investor's perspective, the ZIP code 85035 presents both opportunities and challenges. The FMR for a two-bedroom unit is $1590, but the actual market rent is closer to $2333.63. If an investor aims to participate in the Section 8 program, they must be prepared to accept the lower FMR rates. However, if they can secure tenants willing to pay the market rate, the investment could be cash-flow positive. To determine the investment grade, we need to consider several factors: 1. **Cash Flow**: At the FMR of $1590, investors would need to ensure that their expenses (including mortgage payments, maintenance, insurance, and property taxes) do not exceed this amount. Given the median home value and typical expenses, this would likely result in a negative cash flow unless the property is highly leveraged or has very low operating costs. 2. **Property Value**: With a median home value of $280,035, the property values are relatively stable and could provide long-term appreciation potential. However, the current high rental prices indicate a strong demand, which could also mean that rental properties are in high demand and could potentially offer better returns. 3. **Risk**: Investing in a Section 8-focused property involves accepting government-set rents, which can be lower than market rates. Additionally, there are administrative burdens associated with participating in the Section 8 program, such as regular inspections and compliance with HUD regulations. #### Specific Actionable Insights 1. **Focus on Market-Rate Rentals**: Given the high actual rental prices, investors should consider focusing on market-rate rentals rather than strictly Section 8 properties. A two-bedroom unit renting at $2333.63 would provide a much higher return compared to the FMR of $1590. This strategy would allow investors to capitalize on the strong demand for rental housing in the area. 2. **Diversify Tenant Mix**: Investors could adopt a hybrid approach by accepting both Section 8 vouchers and market-rate tenants. This would help mitigate the risk of lower cash flows while still benefiting from the stability provided by government-backed vouchers. For instance, a property with a mix of Section 8 tenants paying $1590 and market-rate tenants paying $2333.63 could balance out the overall financial performance. #### Bottom Line For Section 8-focused investors, the ZIP code 85035 presents a challenging environment due to the significant gap between FMR and actual market rents. The recommendation is to **Skip** investing in properties exclusively for Section 8 tenants unless you are willing to accept lower cash flows and the associated administrative burdens. Instead, consider **Hold**ing properties with a diversified tenant mix or **Buy**ing properties with the intent to rent them at market rates to maximize returns. ### Summary ZIP code 85035 in Phoenix, AZ, is characterized by a high percentage of renters and a strong demand for housing. The actual rental prices far exceed the FMR, creating a difficult situation for voucher holders. Investors should carefully consider the financial implications of participating in the Section 8 program versus renting at market rates. The bottom line is that while the area offers good potential for rental investments, strict Section 8 focus may not be the most financially viable option.

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.