Section 8 Fair Market Rent (FMR) for ZIP 94301 - 2027

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

Investment Score for ZIP 94301

Monthly Rent (2BR)

$3,650

Median Price (2BR)

$2,157,383

1% Rule

0.17%

Annual Yield

2.03%

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	$2,680
1 Bedroom	$3,050
2 Bedrooms	$3,650
3 Bedrooms	$4,830
4 Bedrooms	$5,300
5 Bedrooms	$6,148
6 Bedrooms	$6,886
7 Bedrooms	$7,437
8 Bedrooms	$7,809

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	$3,050	$1,380,600	0.22%	F
2BR	$3,650	$2,157,383	0.17%	F
3BR	$4,830	$3,890,472	0.12%	F
4BR	$5,300	$5,303,839	0.1%	F
5BR	$6,148	$7,026,218	0.09%	F

Demographics & Housing Statistics

U.S. Census Bureau data (2024)

Population

17,508

Median Household Income

$242,006

Housing Units

8,429

Renter Percentage

47.0%

Occupancy Rate

85.0%

Renter Occupied

3,365

To determine if you should buy in ZIP 94301 (Palo Alto, CA) for Section 8 investment, follow this decision tree:

If the Fair Market Rent (FMR) of $3,500 can cover the debt service on a property valued at $4,436,469:
- Yes, proceed to the next step. The FMR must be sufficient to ensure that rental income meets the financial obligations associated with owning the property.
If the market rent ($4,555 ZORI) is above the FMR:
- Yes, this indicates that there is potential for higher rental income than the FMR, which could be beneficial for non-Section 8 units or when transitioning out of the program.
If the market rent ($4,555 ZORI) is at the FMR:
- It depends. This scenario suggests that the rental income aligns closely with the FMR, making it suitable for Section 8 but offering limited upside for non-program units.
If the market rent ($4,555 ZORI) is below the FMR:
- No, this would make the property less attractive for both Section 8 and market-rate rentals, as it might not generate sufficient income to meet the owner's expectations or cover costs.
If there are 47.0% renters in the area and the days on market (DOM) is not available:
- It depends. A 47.0% rental rate suggests moderate demand, but without DOM data, it's challenging to assess how quickly properties are being rented. High DOM values could indicate a lack of demand or difficulty in finding tenants.

In summary, for ZIP 94301, if the FMR of $3,500 can cover the debt service on your investment, and the market rent is either above or at the FMR, you have a good basis for considering a purchase. However, the lack of DOM data means you need to further investigate the local rental market dynamics to confirm demand. Ensure you also factor in other elements such as property management costs, vacancy rates, and local housing regulations.

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.