Section 8 Fair Market Rent (FMR) for ZIP 87401 - 2027

Investment Score for ZIP 87401

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	$910
1 Bedroom	$910
2 Bedrooms	$1,190
3 Bedrooms	$1,650
4 Bedrooms	$1,780
5 Bedrooms	$2,065
6 Bedrooms	$2,313
7 Bedrooms	$2,498
8 Bedrooms	$2,623

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
2BR	$1,190	$218,704	0.54%	F
3BR	$1,650	$293,871	0.56%	F
4BR	$1,780	$372,194	0.48%	F
5BR	$2,065	$430,382	0.48%	F

Demographics & Housing Statistics

U.S. Census Bureau data (2024)

### Market Analysis for ZIP Code 87401 (Farmington, NM) #### Section 8 Voucher Dynamics The Fair Market Rent (FMR) figures for ZIP code 87401 (Farmington, NM) in 2026 indicate that a two-bedroom unit should rent for $1150. However, the actual rental market is significantly higher, with Zillow reporting a median price of $205,806 for a two-bedroom home. This results in a price-to-FMR ratio of 14.9x, which means that the actual median price for a two-bedroom home is nearly 15 times the FMR. For voucher holders, this presents a significant constraint, as they would struggle to find units that fall within the FMR range. The voucher amount would cover only a fraction of the actual rental costs, making it difficult for tenants to secure housing without additional financial resources. #### Affordability & Renter Profile In ZIP 87401, the population is 45,229, with 35.2% of residents being renters. The median household income is $61,886, and the occupancy rate is 90.6%. Given that a two-bedroom unit's FMR represents 22.3% of the median income, it suggests that the rent burden is relatively high but still manageable for the average household. However, the actual rental market price is much higher, indicating that affordability is a major concern for many renters. With the price-to-FMR ratio being so high, it implies that the market is tight and there is likely a shortage of affordable units. This could lead to competition among voucher holders and other low-income renters, who might have difficulty finding suitable housing options within their budget. #### Investor Angle From an investor perspective, the ZIP code 87401 offers a mixed outlook. The FMR for a two-bedroom unit is $1150, but the actual median rental price is $205,806, which translates to a monthly mortgage payment far exceeding the FMR. To determine if this ZIP code is cash-flow positive at FMR, we need to consider the potential rental income versus the mortgage payment. Assuming a typical mortgage interest rate of around 5%, the monthly payment on a $205,806 property would be approximately $1,030, based on a 30-year fixed-rate mortgage. This is slightly below the FMR for a two-bedroom unit, suggesting that properties rented at FMR levels could potentially generate positive cash flow, albeit minimal. However, the investment grade for this ZIP code is likely to be lower due to the high price-to-FMR ratio. Investors should be cautious about relying solely on FMR-based rental income, as the actual rental market is much higher, and there is a risk of vacancy if properties are priced too close to FMR levels. Additionally, the high price-to-FMR ratio indicates that the market is not aligned with the federal guidelines for affordable housing, which could pose challenges for long-term investment strategies. #### Specific Actionable Insights 1. **Focus on Affordable Units**: Investors should focus on acquiring properties that can be rented at or near the FMR levels. This includes smaller units such as one-bedroom or studio apartments, where the FMR is $940 and $930 respectively. These units are more likely to attract voucher holders and other low-income renters, providing a stable source of rental income. 2. **Consider Multi-Family Properties**: Given the high price-to-FMR ratio, single-family homes are less likely to generate positive cash flow at FMR levels. Instead, investors should look into multi-family properties, which often have lower per-unit costs and can offer more flexibility in terms of rental pricing. For example, a three-bedroom unit has an FMR of $1600, which is closer to the median rental price, potentially offering better cash flow opportunities. 3. **Explore Government Programs**: Investors should explore government programs designed to support affordable housing. This could include tax incentives, grants, or subsidies that help bridge the gap between FMR and actual market prices. By leveraging these programs, investors can improve the financial viability of their properties while contributing to the local housing market. #### Bottom Line Given the high price-to-FMR ratio and the tight rental market, the recommendation for Section 8-focused investors in ZIP 87401 is to **Hold**. While there are opportunities for positive cash flow with certain types of units, the overall market dynamics make it challenging to rely solely on FMR-based rental income. Investors should carefully evaluate the potential for government assistance and focus on properties that align closely with the FMR guidelines to ensure stability and profitability.

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.