Section 8 Fair Market Rent (FMR) for ZIP 85283 - 2027

Investment Score for ZIP 85283

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	$1,500
1 Bedroom	$1,620
2 Bedrooms	$1,880
3 Bedrooms	$2,500
4 Bedrooms	$2,780
5 Bedrooms	$3,225
6 Bedrooms	$3,612
7 Bedrooms	$3,901
8 Bedrooms	$4,096

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	$1,880	$297,398	0.63%	D
3BR	$2,500	$460,978	0.54%	F
4BR	$2,780	$587,547	0.47%	F
5BR	$3,225	$711,716	0.45%	F

Demographics & Housing Statistics

U.S. Census Bureau data (2024)

### Market Analysis for ZIP Code 85283 (Tempe, AZ) #### Section 8 Voucher Dynamics The Fair Market Rent (FMR) for ZIP code 85283 is set by HUD for 2026 as follows: - 0BR: $1650 - 1BR: $1790 - 2BR: $2080 (which represents 29.5% of the median household income) - 3BR: $2770 - 4BR: $3080 These FMRs are used to determine the maximum rent that a Section 8 voucher holder can pay. However, it is important to note that the actual rents in the area often exceed these figures. For instance, the Zillow median price for a 2BR unit is $306,083, which translates into a monthly rental cost of approximately $1230 if we assume a typical rental yield of 5%. This means that the actual rental costs are significantly higher than the FMRs, especially when considering that the price-to-FMR ratio is 12.3x. Therefore, voucher holders face significant constraints in finding affordable housing within their budget. #### Affordability & Renter Profile ZIP code 85283 has a population of 47,459, with 49.1% being renters. The occupancy rate stands at 94.1%, indicating a relatively tight market where most units are occupied. Given the median household income of $84,568, the affordability of housing becomes a critical issue. The FMR for a 2BR unit is $2080, which is only 29.5% of the median income, suggesting that many residents might struggle to afford housing without assistance. With such a high percentage of renters and a limited supply of units, competition for available rentals is likely intense. This tight market condition makes it challenging for low-income individuals to find suitable housing, even with Section 8 vouchers. The high price-to-FMR ratio further exacerbates this issue, as it implies that the average rental price is much higher than what is considered fair market rent. #### Investor Angle From an investor perspective, the ZIP code 85283 presents both opportunities and challenges. The FMRs are set at levels that are significantly lower than the actual rental prices, which means that properties rented to Section 8 voucher holders will likely generate less revenue compared to market-rate rentals. However, the stability of rental payments through the Section 8 program can be attractive for investors seeking consistent cash flow. To evaluate whether this ZIP code is cash-flow positive at FMR, let’s consider the following: - A 2BR unit with a Zillow median price of $306,083 would typically have a mortgage payment of around $1500 per month, assuming a 30-year fixed-rate mortgage at 4.5% interest and a 20% down payment. - Property taxes in Tempe are approximately 0.75% of the property value, leading to a monthly tax payment of about $190. - Maintenance and other operating expenses could add another $200-$300 per month. - Insurance costs might range from $100-$150 per month. Adding these up, the total monthly expenses for a 2BR unit would be approximately $2190-$2300. Since the FMR for a 2BR unit is $2080, this suggests that properties rented at FMR would not be cash-flow positive. Instead, they would require additional subsidies or a different approach to break-even or profit. In terms of investment grade, the tight market conditions and high demand for rentals make this ZIP code potentially attractive for long-term investments. However, the challenge lies in balancing the lower rental income from Section 8 tenants against the higher potential rental income from market-rate tenants. #### Specific Actionable Insights 1. **Target Lower-Rent Units**: Investors should focus on acquiring properties that fall below the FMR threshold, particularly 0BR and 1BR units. These units are more likely to be cash-flow positive given the lower FMR rates. For example, a 1BR unit with an FMR of $1790 might still generate sufficient cash flow if the mortgage and other expenses are managed effectively. 2. **Consider Mixed-Income Developments**: Developing mixed-income communities where some units are rented to Section 8 voucher holders and others to market-rate tenants can help balance the financials. This approach allows investors to benefit from the stability of Section 8 payments while also capturing higher rents from other units. 3. **Utilize Tax Credits and Subsidies**: Given the high demand for affordable housing, investors should explore federal and state tax credits and subsidies designed to support affordable housing projects. These incentives can offset the lower rental income and improve overall profitability. #### Bottom Line For investors focusing specifically on Section 8 properties, the recommendation for ZIP code 85283 is to **Skip**. The high actual rental prices relative to FMRs suggest that properties rented at FMR levels would not be financially viable without additional subsidies. However, for those willing to develop mixed-income communities or utilize tax credits and subsidies, there may be opportunities to **Hold** or even **Buy**, depending on the specific property and its location within the ZIP code. In summary, while the market in 85283 is tight and there is a high demand for rentals, the financial constraints imposed by renting exclusively to Section 8 voucher holders make it a challenging environment for cash-flow positive investments.

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.