Section 8 Fair Market Rent (FMR) for ZIP 85746 - 2027

Investment Score for ZIP 85746

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	$1,100
1 Bedroom	$1,230
2 Bedrooms	$1,580
3 Bedrooms	$2,190
4 Bedrooms	$2,490
5 Bedrooms	$2,888
6 Bedrooms	$3,235
7 Bedrooms	$3,494
8 Bedrooms	$3,669

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	$1,580	$223,439	0.71%	D
3BR	$2,190	$282,571	0.78%	D
4BR	$2,490	$315,293	0.79%	D
5BR	$2,888	$361,653	0.8%	D

Demographics & Housing Statistics

U.S. Census Bureau data (2024)

### Market Analysis for ZIP Code 85746 (Tucson, AZ) #### Section 8 Voucher Dynamics The Fair Market Rent (FMR) for ZIP code 85746 in Tucson, AZ, is set by HUD for 2026. For a two-bedroom unit, the FMR is $1560. However, the Zillow median price for a two-bedroom rental property is significantly higher at $222,151, resulting in a price-to-FMR ratio of 11.9x. This means that the actual rent charged for a two-bedroom unit is much higher than the FMR, making it difficult for Section 8 voucher holders to find suitable housing. The voucher program typically covers only up to the FMR, so tenants would need to pay the difference between the FMR and the actual rent out-of-pocket, which can be substantial. For instance, if a landlord charges $1560, the voucher will cover this amount, but if the rent is $222,151 per year, the tenant would need to pay an additional $1080.15 monthly ($222,151/12 - $1560), which is not feasible given the median household income of $68,903. #### Affordability & Renter Profile ZIP code 85746 has a population of 42,835, with 24.3% being renters. The occupancy rate stands at 93.1%, indicating a relatively tight market where most available units are occupied. Given the median household income of $68,903, the FMR for a two-bedroom unit represents 27.2% of the median income. This suggests that while the FMR is affordable for some households, the actual rents charged are not. The high price-to-FMR ratio indicates that the market is not aligned with affordability standards for low-income renters, who make up a significant portion of the population. #### Investor Angle From an investor’s perspective, the ZIP code 85746 presents a mixed scenario. While the actual rents charged are high, the FMRs are lower. A landlord accepting Section 8 vouchers would receive $1560 for a two-bedroom unit, which is below the market rate. To determine if this is cash-flow positive, we must consider the cost of acquisition and maintenance. If a property is purchased at the Zillow median price of $222,151 and financed with a mortgage, the monthly payment could range from $1000 to $1500 depending on interest rates and loan terms. Additionally, maintenance costs, property taxes, insurance, and other expenses must be factored in. Assuming a conservative estimate of $1000 for monthly mortgage payments and another $500 for combined expenses, the total monthly cost would be $1500. At an FMR of $1560, the net cash flow would be minimal, around $60 per month, which is not sufficient to cover unexpected expenses or generate a profit. Therefore, the investment grade for Section 8-focused properties in this ZIP code is low due to the limited cash flow potential. #### Specific Actionable Insights 1. **Focus on Smaller Units**: Since the FMR for smaller units (0BR and 1BR) is lower at $1080 and $1200 respectively, investors should consider acquiring or developing smaller units. These units are more likely to align with the FMR and provide better cash flow opportunities. For example, a 0BR unit at $1080 would be more affordable for low-income households compared to a 2BR unit at $1560. 2. **Consider Off-Market Properties**: Investors might find better deals on off-market properties, such as foreclosures or short sales, which could be acquired at a discount. This strategy could help reduce the initial purchase cost and improve the cash flow potential when renting at FMR levels. For instance, if a 2BR unit can be acquired for $180,000 instead of the median price of $222,151, the monthly mortgage payment would be lower, improving the overall profitability. #### Bottom Line Given the high price-to-FMR ratio and the limited cash flow potential, the recommendation for Section 8-focused investors in ZIP code 85746 is to **Skip** this market. The actual rents charged far exceed the FMR, making it challenging for voucher holders to find affordable housing. Moreover, the tight market conditions and high property values suggest that the returns on investment would be marginal at best. Investors looking to focus on Section 8 properties should seek areas with a more favorable alignment between FMR and actual rents, or consider alternative investment strategies that do not rely solely on government subsidies.

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.