Section 8 Fair Market Rent (FMR) for ZIP 90242 - 2027

Investment Score for ZIP 90242

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	$2,080
1 Bedroom	$2,330
2 Bedrooms	$2,870
3 Bedrooms	$3,640
4 Bedrooms	$4,070
5 Bedrooms	$4,721
6 Bedrooms	$5,288
7 Bedrooms	$5,711
8 Bedrooms	$5,997

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
1BR	$2,330	$532,140	0.44%	F
2BR	$2,870	$726,518	0.4%	F
3BR	$3,640	$828,362	0.44%	F
4BR	$4,070	$917,923	0.44%	F
5BR	$4,721	$1,106,857	0.43%	F

Demographics & Housing Statistics

U.S. Census Bureau data (2024)

### Market Analysis for ZIP Code 90242 (Downey, CA) #### Section 8 Voucher Dynamics The Fair Market Rent (FMR) for ZIP code 90242, as per the 2026 figures, is set at $2490 for a two-bedroom unit. This represents 33.5% of the median household income in Downey, which stands at $89,075. The FMR serves as a benchmark for rental costs that are considered affordable for low-income families participating in the Section 8 housing choice voucher program. However, it is important to note that the actual rents in the area significantly exceed these FMRs. For instance, the Zillow median price for a two-bedroom home in Downey is $725,680, which translates into a monthly mortgage payment far above the FMR. The price-to-FMR ratio for a two-bedroom unit is 24.3x, indicating that the actual rent prices are much higher than what is covered by the Section 8 vouchers. This high price-to-FMR ratio creates significant constraints for voucher holders. They must find landlords willing to accept a rent amount that is substantially lower than the market rate. In practice, this means that many voucher holders might struggle to secure housing, especially in a competitive market like Downey. #### Affordability & Renter Profile Downey has a population of 40,767, with 46.6% of residents being renters. The occupancy rate is very high at 98%, suggesting that the rental market is tight and there is little vacancy. Given the median household income of $89,075, the majority of renters in Downey are likely middle-class individuals who can afford market rates but still benefit from the affordability of Section 8 vouchers. Despite the relatively high median income, the median rent for a two-bedroom unit ($2490) is only 33.5% of the median household income. This indicates that while the rent is affordable for most households, it is still quite high compared to the FMR. The tight market conditions mean that landlords have less incentive to offer units at the FMR levels, making it difficult for voucher holders to find suitable housing. #### Investor Angle From an investor perspective, the key question is whether renting properties at the FMR levels would be financially viable. The FMR for a two-bedroom unit is $2490, while the Zillow median price suggests a much higher market rent. At the FMR level, investors would likely face negative cash flow due to the high cost of acquisition and maintenance relative to the rental income. To determine the investment grade, we need to consider factors such as the potential for appreciation, the demand for rental properties, and the overall economic health of the area. Downey's strong occupancy rate and significant renter population suggest a robust demand for rentals. However, the high price-to-FMR ratio indicates that properties rented at FMR levels would struggle to generate positive cash flow. Given the tight market and high occupancy rate, investors might still find opportunities if they can secure properties below the Zillow median price or negotiate with landlords willing to accept Section 8 vouchers. However, the overall investment grade for Section 8-focused investors in Downey is likely to be low due to the financial constraints posed by the high price-to-FMR ratio. #### Specific Actionable Insights 1. **Target Lower-Rent Properties**: Investors should focus on acquiring properties that are priced closer to the FMR levels. For example, a two-bedroom property priced at around $2490 would be more attractive to voucher holders and could potentially generate positive cash flow if the purchase price and maintenance costs are managed effectively. 2. **Negotiate with Landlords**: Given the high price-to-FMR ratio, investors should engage in negotiations with existing landlords to understand their willingness to accept Section 8 vouchers. Landlords who are willing to accept vouchers at or near the FMR levels would be more likely to attract tenants, reducing vacancy rates and improving overall profitability. 3. **Consider Smaller Units**: The FMR for smaller units (one-bedroom and zero-bedroom) is lower, at $2000 and $1780 respectively. Investing in these smaller units could provide better cash flow opportunities, as the gap between market rent and FMR is narrower for these unit sizes. #### Bottom Line Based on the analysis, the recommendation for Section 8-focused investors in ZIP code 90242 is to **skip** this market. The high price-to-FMR ratio makes it challenging to achieve positive cash flow, and the tight rental market suggests that finding willing landlords will be difficult. While there is a significant demand for rental properties, the financial constraints imposed by the high market prices relative to the FMR indicate that this ZIP code is not a favorable investment opportunity for those primarily interested in Section 8 vouchers.

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.