Section 8 Fair Market Rent (FMR) for ZIP 87031 - 2027

Investment Score for ZIP 87031

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	$970
1 Bedroom	$1,120
2 Bedrooms	$1,380
3 Bedrooms	$1,920
4 Bedrooms	$2,260
5 Bedrooms	$2,622
6 Bedrooms	$2,937
7 Bedrooms	$3,172
8 Bedrooms	$3,331

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	$1,380	$283,378	0.49%	F
3BR	$1,920	$315,667	0.61%	D
4BR	$2,260	$378,695	0.6%	F
5BR	$2,622	$430,193	0.61%	D

Demographics & Housing Statistics

U.S. Census Bureau data (2024)

### Market Analysis for ZIP Code 87031 (Los Lunas, NM) #### Section 8 Voucher Dynamics In ZIP code 87031, the Fair Market Rent (FMR) for a two-bedroom apartment is set at $1,530 per month. This figure represents 30.1% of the median household income of $60,902, which aligns with HUD guidelines that suggest housing costs should not exceed 30% of a household’s income. However, the actual rental market is significantly higher, with Zillow reporting a median price for a two-bedroom home at $278,501. This translates to a price-to-FMR ratio of 15.2x, indicating that actual rents are likely much higher than the FMR. For instance, if we assume a typical rental yield of 1% per month, the monthly rent would be around $2,785, which is far above the FMR of $1,530. This creates a significant constraint for voucher holders, who can only afford units priced at or below the FMR. Consequently, landlords accepting Section 8 vouchers may struggle to find tenants willing to pay the higher market rates, leading to potential vacancies or lower occupancy rates among properties that accept vouchers. #### Affordability & Renter Profile The renter population in Los Lunas, NM, comprises 16.8% of the total population, which stands at 47,514. Given the occupancy rate of 91.8%, it suggests that the rental market is relatively tight, with few vacant units available. The median household income of $60,902 indicates that the majority of renters are middle-income earners who may find it challenging to afford the high market rents. With the FMR for a two-bedroom unit being only $1,530, which is less than half of the median market rent, many voucher holders will have limited options when searching for affordable housing. This tight market dynamic means that there is a strong demand for units that fall within the FMR range, particularly for those relying on Section 8 vouchers. #### Investor Angle From an investor perspective, the ZIP code 87031 presents mixed opportunities. The FMR for a two-bedroom unit is $1,530, but the actual market rent, based on the price-to-FMR ratio, is approximately $2,785. This discrepancy implies that properties rented out at FMR levels may not generate sufficient cash flow to cover operating expenses, mortgage payments, and desired returns. To determine whether this ZIP code is cash-flow positive at FMR, we need to consider the average operating expenses and mortgage payments. Assuming an average operating expense of 50% of the FMR ($765) and a mortgage payment of $500, the total monthly expenses would be around $1,265. At an FMR of $1,530, this would leave a net cash flow of $265 per month, which is minimal and may not be attractive for most investors seeking higher returns. Furthermore, the investment grade for this ZIP code is likely to be low due to the limited number of renters who can afford market rates and the high competition for affordable units. The low renter percentage (16.8%) also suggests that the rental market is smaller compared to other areas, potentially limiting the pool of potential tenants. #### Specific Actionable Insights 1. **Target Affordable Units**: Investors should focus on acquiring properties that are already priced at or near the FMR levels. For example, a two-bedroom unit priced at $1,530 would be more likely to attract Section 8 voucher holders and provide stable occupancy. This strategy would help mitigate the risk of vacancies and ensure a steady stream of income. 2. **Consider Smaller Units**: Given the high price-to-FMR ratio, investors might want to consider smaller units such as one-bedroom apartments, which have an FMR of $1,240. These units are more likely to be rented out at market rates by voucher holders, as they represent a smaller portion of their income (20.4% of $60,902). Additionally, the demand for smaller units may be higher due to the limited availability of affordable larger units. 3. **Explore Mixed-Income Developments**: Developing mixed-income housing projects could be a viable strategy. By offering a mix of units priced at both market rates and FMR levels, investors can cater to a broader range of renters, including those with Section 8 vouchers. This approach can help balance the cash flow between higher-rent units and lower-rent units, making the overall project more financially sustainable. #### Bottom Line Given the high price-to-FMR ratio and the tight rental market, the recommendation for Section 8-focused investors in ZIP code 87031 is to **Skip** this area. The limited number of renters who can afford market rates and the high competition for affordable units make it challenging to achieve positive cash flow and meet investment goals. Instead, investors might want to explore other ZIP codes where the FMR is closer to the actual market rents, providing better opportunities for stable occupancy and financial returns.

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.