Section 8 Fair Market Rent (FMR) for ZIP 94020 - 2027

Location: San Jose-Sunnyvale-Santa Clara, CA | Metro: San Francisco, CA HUD Metro FMR Area

Investment Score for ZIP 94020

Monthly Rent (2BR)

$4,100

Median Price (2BR)

$851,148

1% Rule

0.48%

Annual Yield

5.78%

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	$2,980
1 Bedroom	$3,320
2 Bedrooms	$4,100
3 Bedrooms	$5,370
4 Bedrooms	$5,830
5 Bedrooms	$6,763
6 Bedrooms	$7,575
7 Bedrooms	$8,181
8 Bedrooms	$8,590

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
2BR	$4,100	$851,148	0.48%	F
3BR	$5,370	$1,235,548	0.43%	F

Demographics & Housing Statistics

U.S. Census Bureau data (2024)

Population

1,694

Median Household Income

$250,001

Housing Units

1,008

Renter Percentage

29.9%

Occupancy Rate

82.2%

Renter Occupied

248

If a landlord is considering purchasing a property in ZIP 94020 (La Honda, CA) for Section 8 investment, they must evaluate several factors to make an informed decision.

Step 1: Determine if the Fair Market Rent (FMR) of $3,730 can cover the debt service on a property valued at $996,998. The FMR is the amount that HUD determines is sufficient to cover the average rent and utility payments for moderately-priced rentals in the area. To assess this, calculate the annual rental income based on the FMR and compare it to the total annual debt service. For instance, if the annual debt service exceeds the annual rental income from the FMR, then the answer is no. If it does not, proceed to the next step.

Step 2: Compare the market rent of $1,715 to the FMR. The FMR for ZIP 94020 is significantly higher than the market rent, indicating that properties rented under Section 8 would yield a higher income compared to the general market. This suggests that renting out a property under Section 8 could be financially beneficial. However, if the market rent were higher than the FMR, landlords might prefer to rent outside the Section 8 program to maximize their income.

Step 3: Evaluate the rental demand. In ZIP 94020, 29.9% of residents are renters, which indicates a moderate level of demand. Additionally, the Days on Market (DOM) data is marked as N/A, suggesting that there may not be reliable recent data on how quickly properties are being rented. Despite this, the percentage of renters provides a baseline understanding of the demand for rental properties in the area.

Decision Tree:

If the FMR of $3,730 does not clear the debt service on a $996,998 property, the answer is No. Do not proceed with the purchase.
If the FMR of $3,730 clears the debt service and the market rent is below the FMR, the answer is Yes. Proceed with the purchase as the Section 8 program would provide higher rental income compared to the market rate.
If the FMR of $3,730 clears the debt service and the market rent is above the FMR, the answer is It Depends. Consider the specific financials of the property and the landlord's preference between potentially higher market rents or the stability and management benefits of Section 8.
If the rental demand is low or uncertain due to incomplete DOM data, the answer is It Depends. A moderate 29.9% of renters suggests some demand but may not be sufficient without further investigation into local economic conditions and housing needs.

The analysis of these factors will guide the landlord in making a sound investment decision for ZIP 94020.

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.