Section 8 Fair Market Rent (FMR) for ZIP 85706 - 2027

Investment Score for ZIP 85706

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	$860
1 Bedroom	$960
2 Bedrooms	$1,230
3 Bedrooms	$1,700
4 Bedrooms	$1,940
5 Bedrooms	$2,250
6 Bedrooms	$2,520
7 Bedrooms	$2,722
8 Bedrooms	$2,858

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	$1,230	$219,245	0.56%	F
3BR	$1,700	$274,350	0.62%	D
4BR	$1,940	$302,577	0.64%	D
5BR	$2,250	$332,901	0.68%	D

Demographics & Housing Statistics

U.S. Census Bureau data (2024)

### Market Analysis for ZIP Code 85706 (Tucson, AZ) #### Section 8 Voucher Dynamics The Fair Market Rent (FMR) for ZIP code 85706 is set by HUD for the year 2026. For a two-bedroom unit, the FMR is $1210 per month. This represents 28.9% of the median household income of $50,248, which is a reasonable percentage for rent affordability. However, it is important to understand how these FMRs compare to actual rents in the area. According to Zillow, the median price for a two-bedroom rental property in this ZIP code is $221,130, which translates to a monthly rent of approximately $1843 based on typical mortgage rates and property values. This means that the actual rent for a two-bedroom unit is significantly higher than the FMR, creating a gap between what voucher holders can afford and the market rate. The price-to-FMR ratio of 15.2x indicates that the market rent is more than 15 times the FMR, which is a substantial difference. Therefore, voucher holders face significant constraints in finding affordable housing within their budget. #### Affordability & Renter Profile ZIP code 85706 has a population of 54,236, with 42.8% being renters. This high percentage suggests that there is a strong demand for rental properties in the area. The occupancy rate of 93.2% further supports the notion that the market is relatively tight, with few vacant units available. Given the median household income of $50,248, many residents likely struggle with housing costs, especially when considering that the median rent for a two-bedroom unit is $1843, which is nearly 45% of the median income. This makes housing particularly challenging for low-income households, including those who rely on Section 8 vouchers. The high rent-to-income ratio implies that the market is competitive and that there is limited affordable housing stock available. #### Investor Angle From an investor perspective, the key question is whether the ZIP code offers cash-flow positive opportunities at the FMR levels. Given that the actual market rent for a two-bedroom unit is $1843, while the FMR is $1210, it is clear that renting at the FMR would result in a significant loss compared to market rates. However, if an investor is willing to accept lower rents due to the availability of Section 8 vouchers, they could still find some positive aspects. The occupancy rate of 93.2% suggests that there is a stable demand for rental properties, which could provide a steady stream of tenants. In terms of investment grade, the high price-to-FMR ratio of 15.2x indicates that the area is overpriced relative to the FMR, making it less attractive for investors seeking to maximize returns through market-rate rentals. However, for investors specifically targeting Section 8 voucher holders, the stability of demand and the potential for long-term tenancy might still make it a viable option, albeit with lower profit margins. #### Specific Actionable Insights 1. **Focus on Smaller Units**: Given the high price-to-FMR ratio, investors should consider focusing on smaller units such as one-bedroom or studio apartments. These units have lower FMRs ($930 for 1BR), which might be closer to the actual market rents for similar-sized units. This could help bridge the gap between the FMR and the market rate, making the investment more financially feasible. 2. **Target Affordable Housing Projects**: Investors looking to capitalize on the high demand for affordable housing should explore projects that cater specifically to low-income households. This might include developing or renovating properties that can be rented out at or near the FMR levels. Additionally, participating in local affordable housing initiatives or programs could provide additional financial incentives and support. 3. **Consider Long-Term Tenancy**: While renting at FMR levels would result in lower immediate returns, the stability of demand and the potential for long-term tenancy could offset these losses. Section 8 voucher holders often stay in their homes longer than other renters, providing a more predictable and consistent revenue stream. This could be particularly beneficial for investors looking for stable, long-term investments rather than short-term gains. #### Bottom Line For Section 8-focused investors, the ZIP code 85706 presents a mixed picture. On one hand, the high demand for rental properties and the occupancy rate suggest a stable market with consistent tenant flow. On the other hand, the significant gap between the FMR and the actual market rent makes it challenging to achieve positive cash flow without accepting lower-than-market rents. Given these factors, the recommendation for investors is to **Hold**. The ZIP code offers opportunities for long-term, stable investments but requires a strategic approach to manage the financial risks associated with renting at FMR levels. Investors should carefully evaluate the potential for smaller units and consider partnerships with local affordable housing initiatives to enhance the viability of their 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.