Location: Santa Ana-Anaheim-Irvine, CA | Metro: Santa Ana-Anaheim-Irvine, CA HUD Metro FMR Area
Based on 1% Rule: A+ (≥1.5%) | A (≥1.2%) | B (≥1.0%) | C (≥0.8%) | D (≥0.6%) | F (<0.6%)
| Unit Size | Monthly FMR |
|---|---|
| Studio | $2,530 |
| 1 Bedroom | $2,560 |
| 2 Bedrooms | $3,000 |
| 3 Bedrooms | $4,080 |
| 4 Bedrooms | $4,870 |
| 5 Bedrooms | $5,649 |
| 6 Bedrooms | $6,327 |
| 7 Bedrooms | $6,833 |
| 8 Bedrooms | $7,175 |
Zillow median home prices vs Section 8 FMR rates (Data: 2026-07-31)
| Bedrooms | Monthly FMR | Median Price | 1% Rule | Grade |
|---|---|---|---|---|
| 1BR | $2,560 | $413,743 | 0.62% | D |
| 2BR | $3,000 | $600,393 | 0.5% | F |
| 3BR | $4,080 | $1,176,050 | 0.35% | F |
| 4BR | $4,870 | $1,482,700 | 0.33% | F |
| 5BR | $5,649 | $2,020,065 | 0.28% | F |
U.S. Census Bureau data (2024)
In Fullerton, California, specifically ZIP code 92835, real estate investors often question whether the Fair Market Rent (FMR) of $2,760 for the fiscal year 2024 can adequately cover the mortgage payments on a property valued at $1,317,904. To evaluate this, we must consider the typical mortgage rates and terms. Assuming a 30-year fixed-rate mortgage at an average rate of 5%, the monthly mortgage payment for a home priced at $1,317,904 would be approximately $6,840, including principal and interest. This figure significantly exceeds the FMR, indicating that relying solely on FMR would not cover the mortgage costs. However, it's important to note that this calculation does not factor in potential rental increases over time or other income streams such as tax benefits or appreciation.
The second objection centers around the demand for rental properties in the area, given that only 26.3% of the housing stock is rented out. This percentage might seem low, suggesting a limited pool of tenants. Yet, Fullerton has a population of over 140,000 residents, and the rental market is competitive due to its proximity to major universities and employment hubs. The low rental rate could also be indicative of strong homeownership incentives, which are common in suburban areas. Despite the lower percentage, the absolute number of renters represents a substantial market. Additionally, the median household income in Fullerton is around $90,000, providing a stable economic foundation for the rental market.
A final concern is whether Housing Choice Vouchers will keep up with the market rent of $3,533. The voucher amount is determined annually based on local housing conditions and federal guidelines. While the data does not provide the exact voucher amount for ZIP 92835, historically, voucher amounts have been lower than market rents. In Fullerton, the average voucher payment might not fully cover the market rent, leading to a gap that landlords would need to absorb or make up through additional tenant contributions. However, the program aims to ensure that voucher holders pay 30% of their adjusted income towards rent, which can be a reliable source of income for landlords, especially when considering the stability these tenants bring.
To conclude, while the FMR of $2,760 is insufficient to cover the mortgage on a $1,317,904 home, Fullerton's rental market remains robust due to its economic strength and the presence of universities and businesses. The Housing Choice Vouchers, though likely to fall short of covering the full $3,533 market rent, offer a dependable income stream for landlords willing to participate in the program.
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.