Section 8 Fair Market Rent (FMR) for ZIP 92705 - 2027

Investment Score for ZIP 92705

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	$2,450
1 Bedroom	$2,480
2 Bedrooms	$2,920
3 Bedrooms	$3,960
4 Bedrooms	$4,730
5 Bedrooms	$5,487
6 Bedrooms	$6,145
7 Bedrooms	$6,637
8 Bedrooms	$6,969

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	$2,480	$491,824	0.5%	F
2BR	$2,920	$603,877	0.48%	F
3BR	$3,960	$1,367,940	0.29%	F
4BR	$4,730	$1,761,574	0.27%	F
5BR	$5,487	$2,356,803	0.23%	F

Demographics & Housing Statistics

U.S. Census Bureau data (2024)

### Market Analysis for ZIP Code 92705 (North Tustin, CA) #### Section 8 Voucher Dynamics The Fair Market Rent (FMR) for ZIP code 92705 is set by HUD for the year 2026. The FMRs for various bedroom sizes are as follows: - 0BR: $2530 - 1BR: $2590 - 2BR: $3050 (which is 28.3% of the median household income) - 3BR: $4140 - 4BR: $4940 To understand how these FMRs compare to actual rents, we need to consider the price-to-FMR ratio. For a 2BR unit, the Zillow median price is $606,089, which translates to a monthly mortgage payment of approximately $2,424 assuming a 30-year fixed-rate mortgage at 4.5%. However, the price-to-FMR ratio of 16.6x suggests that the actual rent for a 2BR unit is significantly higher than the FMR. This means that landlords who want to participate in the Section 8 program must accept a rent that is much lower than what the market would typically bear. Given that the FMR for a 2BR unit is $3050, but the actual rent is likely much higher, Section 8 voucher holders face significant constraints. They may struggle to find units that are both affordable and suitable for their needs, especially if they require larger units like 3BR or 4BR, where the FMRs are $4140 and $4940 respectively. These figures are still below what the market might charge, making it challenging for voucher holders to secure housing. #### Affordability & Renter Profile ZIP code 92705 has a population of 48,781, with 38.7% of residents being renters. The occupancy rate stands at 96.7%, indicating a very tight rental market. With a median household income of $129,331, the area is relatively affluent. The fact that 2BR units' FMR represents only 28.3% of the median income suggests that the majority of residents can afford market rates, leaving limited options for those relying on Section 8 vouchers. The high price-to-FMR ratio of 16.6x further underscores the tightness of the market. This ratio implies that the median rent for a 2BR unit could be around $50,430 annually ($4202.50 per month), which is far above the FMR. Consequently, the market is highly competitive for renters, particularly those with limited financial resources. #### Investor Angle From an investor perspective, participating in the Section 8 program in ZIP code 92705 could be financially challenging due to the low FMR compared to market rents. Let’s break down the potential cash flow: Assuming a 2BR unit with a Zillow median price of $606,089, the monthly mortgage payment would be approximately $2,424. Adding property taxes, insurance, maintenance, and other costs, the total monthly expenses could easily exceed the FMR of $3050. Therefore, landlords who accept Section 8 vouchers would likely experience negative cash flow unless they have substantial equity in the property or can leverage other cost-saving measures. In terms of investment grade, given the tight rental market and the high price-to-FMR ratio, the investment grade for Section 8 properties in this ZIP code would be considered low. Investors should carefully evaluate the potential returns against the risks associated with lower rents and higher operational costs. #### Specific Actionable Insights 1. **Focus on Smaller Units**: Given the high price-to-FMR ratio, investors should focus on smaller units such as 0BR or 1BR apartments. These units have FMRs of $2530 and $2590 respectively, which are closer to the actual market rents for similar-sized units. This could help mitigate the risk of negative cash flow. 2. **Consider High-Demand Areas**: Since the occupancy rate is 96.7%, there is a strong demand for rental properties. Investors should look for areas within North Tustin that have a higher concentration of renters and potentially lower competition from market-rate rentals. This could include neighborhoods near schools, public transportation, or employment centers. 3. **Evaluate Property Costs**: Before investing, thoroughly evaluate the total cost of ownership including mortgage payments, property taxes, insurance, and maintenance. If these costs exceed the FMR, it may not be a viable investment for Section 8-focused investors. #### Bottom Line For investors focused on Section 8 properties, the recommendation for ZIP code 92705 is to **Skip**. The high price-to-FMR ratio and tight rental market make it difficult to achieve positive cash flow. Additionally, the high median household income and limited number of voucher holders suggest that the demand for Section 8 units is low relative to the overall rental market. Investors looking to enter this market should consider alternative ZIP codes with more favorable conditions for Section 8 properties.

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.