Section 8 Fair Market Rent (FMR) for ZIP 92240 - 2027

Investment Score for ZIP 92240

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	$1,530
1 Bedroom	$1,600
2 Bedrooms	$1,990
3 Bedrooms	$2,630
4 Bedrooms	$3,170
5 Bedrooms	$3,677
6 Bedrooms	$4,118
7 Bedrooms	$4,447
8 Bedrooms	$4,669

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	$1,600	$149,086	1.07%	B
2BR	$1,990	$284,821	0.7%	D
3BR	$2,630	$378,977	0.69%	D
4BR	$3,170	$417,083	0.76%	D
5BR	$3,677	$487,238	0.75%	D

Demographics & Housing Statistics

U.S. Census Bureau data (2024)

### Market Analysis for ZIP Code 92240 (Desert Hot Springs, CA) #### Section 8 Voucher Dynamics The Fair Market Rent (FMR) for ZIP code 92240, as set by HUD for 2026, is $2080 for a two-bedroom unit. This represents 46.2% of the median household income in Desert Hot Springs, which stands at $54,023. The FMR is designed to reflect the average rent that voucher holders can afford in the area. However, the actual rental market prices can be significantly higher. For instance, the Zillow median price for a two-bedroom home in 92240 is $281,365, which translates to a monthly mortgage payment of approximately $1200 based on typical financing terms. When considering property taxes, insurance, and maintenance costs, the total monthly cost for landlords could easily exceed the FMR. Given the high price-to-FMR ratio of 11.3x, it is evident that the actual market rents are substantially above the FMR levels. This means that Section 8 voucher holders face significant constraints in finding housing that fits within their budget. Landlords who accept vouchers must be willing to rent below market rates, which can impact their profitability. #### Affordability & Renter Profile In ZIP code 92240, 43.2% of the population are renters, indicating a substantial demand for rental properties. With a median household income of $54,023, affordability is a key concern for many residents. The FMR for a two-bedroom unit at $2080 is only slightly less than half of the median income, suggesting that the majority of renters would struggle to find affordable housing without assistance. The occupancy rate of 89.3% indicates that the rental market is relatively tight, with most units occupied. This tightness could lead to upward pressure on rents, making it even harder for low-income families to secure housing. Given the high proportion of renters and the limited supply, there is likely a competitive environment for rental properties, especially those that are affordable. #### Investor Angle From an investor perspective, the ZIP code 92240 presents both opportunities and challenges. The FMR for a two-bedroom unit is $2080, but the actual market rent for similar properties is much higher. The price-to-FMR ratio of 11.3x suggests that landlords accepting Section 8 vouchers will be renting at a fraction of the market value. To determine if this ZIP code is cash-flow positive at FMR, we need to consider the total costs associated with owning and maintaining a rental property. Assuming a typical mortgage payment of $1200 for a two-bedroom home, plus an additional $300 for property taxes, $100 for insurance, and $100 for maintenance, the total monthly cost would be around $1700. At an FMR of $2080, this leaves a potential profit margin of $380 per month, which is positive but narrow given the high upfront costs and ongoing expenses. The investment grade for this ZIP code is moderate. While there is a strong demand for rental properties, the tight market and high competition mean that investors must carefully evaluate the financials and consider the long-term sustainability of their investments. Additionally, the requirement to accept lower rents due to Section 8 vouchers can make the investment less attractive compared to other markets where rents are closer to market rates. #### 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. The FMR for a one-bedroom unit is $1670, which is still below the typical market rent but offers a better balance between affordability and profitability. This strategy can help attract voucher holders while maintaining a reasonable cash flow. 2. **Target Affordable Housing Projects**: Investors looking to capitalize on the demand for affordable housing should consider projects that specifically cater to low-income families. This might include renovating older properties to meet modern standards or building new units with features that appeal to Section 8 voucher holders. By aligning with local government initiatives and programs aimed at increasing affordable housing stock, investors can benefit from subsidies and tax incentives. 3. **Evaluate Long-Term Trends**: The rental market in Desert Hot Springs is currently tight, with high occupancy rates and a significant portion of the population renting. However, investors should also consider long-term trends such as population growth and economic development. If the area continues to grow, the demand for rental properties will likely increase, potentially leading to higher rents and greater profitability over time. #### Bottom Line For Section 8-focused investors, the ZIP code 92240 presents a mixed picture. On one hand, there is a strong demand for affordable housing and a significant number of renters who rely on vouchers. On the other hand, the high price-to-FMR ratio means that landlords accepting vouchers will be renting at a substantial discount to market rates. Given these factors, the recommendation for investors is to **Hold**. The current market conditions suggest that while there is potential for positive cash flow, the overall investment grade is moderate. Investors should carefully assess the financials and consider strategies to maximize returns while remaining compliant with Section 8 requirements. Additionally, keeping an eye on future developments and trends in the area can provide valuable insights into whether the investment becomes more attractive over time.

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.