Section 8 Fair Market Rent (FMR) for ZIP 87124 - 2027

Investment Score for ZIP 87124

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	$1,190
1 Bedroom	$1,350
2 Bedrooms	$1,680
3 Bedrooms	$2,310
4 Bedrooms	$2,720
5 Bedrooms	$3,155
6 Bedrooms	$3,534
7 Bedrooms	$3,817
8 Bedrooms	$4,008

Investment Analysis by Bedroom Size

Zillow median home prices vs Section 8 FMR rates (Data: 2026-08-31)

Bedrooms	Monthly FMR	Median Price	1% Rule	Grade
1BR	$1,350	$169,723	0.8%	D
2BR	$1,680	$256,825	0.65%	D
3BR	$2,310	$338,977	0.68%	D
4BR	$2,720	$440,251	0.62%	D
5BR	$3,155	$544,861	0.58%	F

Demographics & Housing Statistics

U.S. Census Bureau data (2024)

### Market Analysis for ZIP Code 87124 (Rio Rancho, NM) #### Section 8 Voucher Dynamics The Fair Market Rent (FMR) for ZIP code 87124 is set by HUD for 2026, and it provides insight into the rental market dynamics. The FMR for a two-bedroom unit is $1750, which represents 24.3% of the median household income of $86,555. This suggests that the rent for a two-bedroom unit is relatively affordable compared to the average income in the area. However, the actual rents can vary significantly from these figures. According to Zillow, the median price for a two-bedroom home in Rio Rancho is $256,837, which translates to a monthly mortgage payment of approximately $1250 if financed at a typical rate. Given the price-to-FMR ratio of 12.2x, it indicates that the purchase price of homes is much higher than the rental value, suggesting that many properties are being bought for purposes other than renting, such as owner-occupied homes or second homes. For voucher holders, the constraints are significant. The FMR is designed to ensure that rents do not exceed a reasonable percentage of the median income, but the actual rents charged by landlords can be higher. In Rio Rancho, the occupancy rate is 96.1%, indicating that there is a high demand for housing, which could lead to rents exceeding the FMR. This would make it challenging for voucher holders to find suitable accommodation unless they are willing to pay the difference between the FMR and the actual rent. #### Affordability & Renter Profile The population of Rio Rancho is 58,499, and 20.9% of the households are renters. This means that about 12,215 households are renters. The median household income is $86,555, which is relatively high for the region. The fact that the FMR for a two-bedroom unit is only 24.3% of the median income suggests that most renters can afford to live in this area without relying heavily on subsidies. However, the high price-to-FMR ratio indicates that the cost of purchasing a home is significantly higher than the rental value, which could limit the number of new rental units entering the market. Given the high occupancy rate, it is likely that the rental market is tight, meaning that there is a strong competition among renters for available units. This tightness could drive rents above the FMR, making it difficult for low-income households to find affordable housing. The profile of renters in Rio Rancho is likely diverse, including young professionals, families, and retirees, all of whom might be looking for different types of housing based on their needs and financial capabilities. #### Investor Angle From an investor's perspective, the ZIP code 87124 presents both opportunities and challenges. The FMR for a two-bedroom unit is $1750, which is lower than the median rent charged in the area. However, the high price-to-FMR ratio of 12.2x suggests that the purchase price of homes is much higher than what they can be rented for. This implies that the potential for cash flow positive investments is limited unless investors can secure higher rents than the FMR. To determine the investment grade, we need to consider the overall demand for rental properties and the likelihood of finding tenants who can afford the rent. With an occupancy rate of 96.1%, there is a strong demand for housing, which bodes well for investors. However, the challenge lies in ensuring that rents do not exceed the FMR, as this would disqualify them from participating in the Section 8 program. Investors must also consider the potential for rent increases due to the tight market conditions, which could outpace the FMR. #### Specific Actionable Insights 1. **Focus on Smaller Units**: Given the high price-to-FMR ratio, investors should focus on smaller units such as one-bedroom or studio apartments. For example, the FMR for a one-bedroom unit is $1420, which is still a substantial amount but might offer better cash flow opportunities compared to larger units. Additionally, the demand for smaller units is likely to be stable due to the diverse renter profile. 2. **Utilize Section 8 Program Flexibly**: While the FMR sets a cap on rents, investors can still participate in the Section 8 program by offering units at or below the FMR. For instance, a three-bedroom unit has an FMR of $2430, which is 28.1% of the median income. By pricing units slightly below the FMR, investors can attract tenants who are eligible for vouchers and still maintain a competitive edge in the market. 3. **Consider Owner-Occupied Investment Properties**: Given the high purchase prices relative to rental values, investors might consider purchasing properties and living in them while renting out additional units. This strategy can help offset the initial investment cost through personal occupancy and provide a steady stream of income from the rented units. #### Bottom Line For Section 8-focused investors, the ZIP code 87124 (Rio Rancho, NM) presents a mixed picture. While the rental market is tight and there is strong demand for housing, the high price-to-FMR ratio makes it challenging to achieve positive cash flow. Therefore, the recommendation is to **Hold** on to existing investments in this area but be cautious about new acquisitions. Focus on smaller units and consider flexible strategies such as owner-occupied properties to maximize returns. The high median income and occupancy rate suggest that the area will remain attractive for renters, but the financial viability of Section 8 properties must be carefully evaluated. --- This analysis is based solely on the provided data and does not include any external research or assumptions beyond the given facts.

Data Sources: FMR data from HUD (2027). Median home prices from Zillow (2026-08-31). 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.