Section 8 Fair Market Rent (FMR) for ZIP 92040 - 2027

Investment Score for ZIP 92040

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	$1,930
1 Bedroom	$2,050
2 Bedrooms	$2,480
3 Bedrooms	$3,290
4 Bedrooms	$3,980
5 Bedrooms	$4,617
6 Bedrooms	$5,171
7 Bedrooms	$5,585
8 Bedrooms	$5,864

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	$2,050	$353,193	0.58%	F
2BR	$2,480	$518,690	0.48%	F
3BR	$3,290	$804,134	0.41%	F
4BR	$3,980	$904,861	0.44%	F
5BR	$4,617	$1,042,813	0.44%	F

Demographics & Housing Statistics

U.S. Census Bureau data (2024)

### Market Analysis for ZIP Code 92040 (Lakeside, CA) #### Section 8 Voucher Dynamics The Fair Market Rent (FMR) for ZIP code 92040, as determined by HUD for 2026, is set at $2630 for a two-bedroom unit. This figure represents 29.2% of the median household income in the area, which stands at $107,937. However, the actual rental market is significantly higher, with the Zillow median price for a two-bedroom unit being $531,226. This translates into a price-to-FMR ratio of 16.8x, indicating that actual rents far exceed the FMR. For voucher holders, this means that finding affordable housing within the parameters of their vouchers can be challenging. The FMR is designed to cover approximately 40% of the rent, but given the high actual rental prices, it’s likely that voucher holders will need to contribute a substantial portion of their income to make up the difference. For instance, if a two-bedroom unit costs $531,226 annually, the voucher would only cover about $2630 per month, leaving the tenant to pay the remaining balance, which is a significant financial burden. #### Affordability & Renter Profile ZIP code 92040 has a population of 46,216, with 32.3% of residents being renters. This suggests a moderate demand for rental properties, but the occupancy rate of 95.8% indicates a tight market where most available units are already occupied. Given the high median household income and the relatively low percentage of renters, it’s clear that Lakeside is primarily a homeownership-oriented community. However, the rental segment is still significant and competitive. The affordability gap is stark, with the FMR for a two-bedroom unit being $2630, while the actual median rent is much higher. This makes it difficult for lower-income households to find suitable housing without significant out-of-pocket expenses. Additionally, the high price-to-FMR ratio implies that even those who do not rely on Section 8 vouchers might struggle to afford housing in this area. #### Investor Angle From an investor perspective, the ZIP code 92040 presents a mixed picture. While the rental market is robust, with a high occupancy rate, the actual rents are far above the FMR. This means that properties rented at FMR levels would likely not generate positive cash flow due to the high cost of acquisition and maintenance. For example, a two-bedroom property priced at $531,226 would have an annual rent of around $53,122.60, assuming a conservative 10% cap rate. At the FMR level of $2630 per month, the annual rent would be $31,560, which is well below the expected rental income needed to cover mortgage payments, taxes, insurance, and maintenance costs. Given these dynamics, the investment grade for this ZIP code is relatively low for Section 8-focused investors. The high price-to-FMR ratio and the limited number of voucher holders who can afford the actual rents suggest that returns would be minimal or negative. #### Specific Actionable Insights 1. **Focus on Smaller Units**: Investors should consider focusing on smaller units, such as one-bedroom apartments, which have a lower FMR of $2160. Although the price-to-FMR ratio remains high, the lower FMR might make it easier for voucher holders to find affordable housing. Additionally, one-bedroom units are generally less expensive to acquire and maintain, potentially improving cash flow. 2. **Target Affordable Housing Projects**: Given the high cost of existing properties, developers or investors might look into building new affordable housing units specifically designed for Section 8 voucher holders. This could involve working with local government programs to secure subsidies or tax breaks that would help offset the higher construction costs. 3. **Consider Alternative Rental Assistance Programs**: Since the standard Section 8 voucher may not be sufficient to cover the actual rent in this area, investors might explore alternative rental assistance programs that offer higher subsidies or work with local non-profits to provide additional support to tenants. #### Bottom Line For investors focused on Section 8 vouchers, the ZIP code 92040 is not recommended for purchase. The high price-to-FMR ratio and the limited number of voucher holders who can afford the actual rents make it challenging to achieve positive cash flow. Instead, investors should consider other areas with a more favorable price-to-FMR ratio or focus on alternative investment strategies that target affordable housing projects or smaller units. In summary, the recommendation for Section 8-focused investors is to **skip** this ZIP code and look for opportunities elsewhere.

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.