Section 8 Fair Market Rent (FMR) for ZIP 94109 - 2027

Investment Score for ZIP 94109

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	$2,240
1 Bedroom	$2,680
2 Bedrooms	$3,250
3 Bedrooms	$4,170
4 Bedrooms	$4,690
5 Bedrooms	$5,440
6 Bedrooms	$6,093
7 Bedrooms	$6,580
8 Bedrooms	$6,909

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	$2,680	$715,221	0.37%	F
2BR	$3,250	$1,256,745	0.26%	F
3BR	$4,170	$1,948,786	0.21%	F
4BR	$4,690	$3,825,178	0.12%	F

Demographics & Housing Statistics

U.S. Census Bureau data (2024)

### Market Analysis for ZIP Code 94109 (San Francisco, CA) #### Section 8 Voucher Dynamics The Fair Market Rent (FMR) for ZIP code 94109 is set by HUD for 2026, with specific rates for different bedroom sizes. For a two-bedroom unit, the FMR is $3,090, which represents 35.0% of the median household income of $106,018. However, the actual rent for a two-bedroom unit in this area is significantly higher, with Zillow reporting a median price of $1,202,763. This translates to a price-to-FMR ratio of 32.4x, indicating that the actual rental costs far exceed the FMR. Given these figures, it is clear that Section 8 voucher holders face significant constraints in finding affordable housing within the ZIP code. The FMR is designed to cover the average rent for a given area, but in 94109, the gap between FMR and actual rents is substantial. This means that landlords who accept Section 8 vouchers are likely to receive rents that are much lower than the market rate, potentially leading to financial strain if they are not able to find other sources of revenue or subsidies. #### Affordability & Renter Profile ZIP code 94109 has a high concentration of renters, with 83.2% of households renting their homes. This indicates a strong demand for rental properties in the area. Additionally, the occupancy rate is 79.7%, suggesting that there is a slight undersupply of rental units relative to the number of available units. Given the high renter percentage and relatively low occupancy rate, it can be inferred that the market is tight, with many potential renters competing for limited housing options. The median household income of $106,018 is quite high, reflecting the overall economic prosperity of San Francisco. However, the fact that the FMR for a two-bedroom unit is only 35.0% of this income highlights the significant affordability challenges faced by residents, particularly those relying on Section 8 vouchers. With the median Zillow price for a two-bedroom unit being $1,202,763, it is evident that the majority of residents in this ZIP code must either have incomes well above the median or rely heavily on subsidies to afford housing. #### Investor Angle From an investor perspective, the ZIP code 94109 presents a challenging environment for cash flow. The FMR for a two-bedroom unit is $3,090, while the actual median rental price is much higher. This means that landlords who accept Section 8 vouchers will be receiving rents that are significantly below the market rate. To determine the investment grade, we need to consider the potential returns against the risks. The high price-to-FMR ratio suggests that the market is overpriced relative to the FMR, which could indicate a risk of vacancy if landlords exclusively target Section 8 tenants. Additionally, the tight market conditions imply that there is a strong demand for rental properties, but this demand is primarily driven by higher-income individuals who can afford the market rates. Given the high median home value and the tight market, it is unlikely that landlords will be able to achieve positive cash flow solely based on FMR rates. The investment grade would therefore be considered low, as the returns from accepting Section 8 vouchers are not likely to be sufficient to cover the high costs associated with owning property in this ZIP code. #### Specific Actionable Insights 1. **Target Mixed-Income Properties**: Investors should consider targeting mixed-income properties where they can balance Section 8 tenants with market-rate renters. This approach can help mitigate the financial impact of accepting vouchers by ensuring a steady stream of higher-paying tenants. 2. **Focus on Smaller Units**: Given the high price-to-FMR ratio, smaller units such as studios or one-bedroom apartments might offer better opportunities for positive cash flow. The FMR for a one-bedroom unit is $2,550, which is still significantly below the market rate but offers a slightly better margin compared to larger units. 3. **Explore Subsidies and Programs**: Investors should explore additional subsidies and programs that can help bridge the gap between FMR and market rates. For example, the Low-Income Housing Tax Credit (LIHTC) program provides tax incentives for developers who build affordable housing units. By leveraging these programs, investors can improve their financial position while still providing affordable housing options. #### Bottom Line Based on the provided data, the recommendation for Section 8-focused investors in ZIP code 94109 is to **Skip**. The high price-to-FMR ratio and tight market conditions make it difficult to achieve positive cash flow solely through Section 8 vouchers. While there is a strong demand for rental properties, the economic realities of the area suggest that focusing on this ZIP code would be financially challenging without additional subsidies or a mixed-income strategy.

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.