Section 8 Fair Market Rent (FMR) for ZIP 85205 - 2027

Investment Score for ZIP 85205

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	$1,160
1 Bedroom	$1,260
2 Bedrooms	$1,450
3 Bedrooms	$1,940
4 Bedrooms	$2,160
5 Bedrooms	$2,506
6 Bedrooms	$2,807
7 Bedrooms	$3,032
8 Bedrooms	$3,184

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	$1,450	$303,101	0.48%	F
3BR	$1,940	$411,880	0.47%	F
4BR	$2,160	$521,578	0.41%	F
5BR	$2,506	$869,654	0.29%	F

Demographics & Housing Statistics

U.S. Census Bureau data (2024)

### Market Analysis for ZIP Code 85205 (Mesa, AZ) #### Section 8 Voucher Dynamics In ZIP code 85205, the Fair Market Rent (FMR) for a two-bedroom apartment is set at $1610 per month for the year 2026. This amount represents 26.4% of the median household income of $73,283. However, the actual rental market in Mesa, AZ, is significantly higher. According to Zillow, the median price for a two-bedroom home is $305,749, which translates to a monthly rent of approximately $1524 if we consider a typical mortgage payment based on a 4.5% interest rate over 30 years. The disparity between the FMR and actual rents is stark, with the price-to-FMR ratio being 15.8 times. This means that landlords who accept Section 8 vouchers will likely be operating at a significant discount compared to market rates, potentially leading to financial strain or reluctance to participate in the program. #### Affordability & Renter Profile The ZIP code 85205 has a population of 45,116, with 26.6% of residents being renters. This indicates that there is a substantial demand for rental properties, but it also suggests that the market is relatively tight. The occupancy rate stands at 83.3%, indicating that most units are occupied, leaving limited availability for new tenants. Given the median household income of $73,283, the affordability of housing is a critical issue for many residents. The FMR for a two-bedroom unit at $1610 is already a significant portion of the median income, making it challenging for low-income families to find affordable housing without assistance. #### Investor Angle From an investor perspective, the ZIP code 85205 presents both opportunities and challenges. The FMR for a two-bedroom unit is $1610, but the actual median market price is much higher at $305,749, translating to a monthly rent of about $1524. This means that landlords accepting Section 8 vouchers would be renting below market value, which could impact their ability to cover expenses such as maintenance, property taxes, and insurance. To determine if this ZIP code is cash-flow positive at FMR, we need to consider the typical costs associated with owning and maintaining a rental property. Assuming a conservative estimate of $500 per month for these expenses, the net cash flow would be $1110 ($1610 - $500). This is a relatively low margin, especially considering the high upfront cost of purchasing a property in this area. The investment grade for this ZIP code can be considered moderate. While there is a strong demand for rental properties, the tight market and high costs make it less attractive for purely profit-driven investors. However, those willing to participate in the Section 8 program and who prioritize social impact might find it worthwhile. #### Specific Actionable Insights 1. **Focus on Smaller Units**: Given the high price-to-FMR ratio, investors should focus on smaller units like one-bedroom apartments. The FMR for a one-bedroom unit is $1390, which is still a significant discount from the median market price. This could provide a better balance between affordability and profitability. For example, a one-bedroom unit rented at $1390 could potentially have a net cash flow of $890 if the total monthly expenses are around $500. 2. **Consider Renovation Projects**: Investors looking to maximize returns could consider purchasing older properties at lower prices and renovating them to meet the FMR standards. This approach allows for leveraging lower purchase prices while still benefiting from the higher FMR. For instance, a property purchased for $250,000 could be renovated for $50,000, bringing the total investment to $300,000. If rented at $1610 for a two-bedroom unit, the net cash flow would be $1110, providing a steady income stream despite the lower initial purchase price. #### Bottom Line For Section 8-focused investors, the recommendation for ZIP code 85205 is to **Hold**. The market is tight, and the high price-to-FMR ratio makes it challenging to achieve significant profits. However, the demand for affordable housing remains strong, and there are opportunities for investors who are willing to work within the constraints of the Section 8 program. Concentrating on smaller units and considering renovation projects can help mitigate some of the financial risks involved. Overall, while the market is not ideal for pure profit maximization, it offers a stable and socially impactful investment opportunity.

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.