Section 8 Fair Market Rent (FMR) for ZIP 95116 - 2027

Investment Score for ZIP 95116

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	$1,960
1 Bedroom	$2,220
2 Bedrooms	$2,610
3 Bedrooms	$3,510
4 Bedrooms	$3,740
5 Bedrooms	$4,338
6 Bedrooms	$4,859
7 Bedrooms	$5,248
8 Bedrooms	$5,510

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	$2,220	$438,407	0.51%	F
2BR	$2,610	$725,943	0.36%	F
3BR	$3,510	$936,518	0.37%	F
4BR	$3,740	$1,073,384	0.35%	F
5BR	$4,338	$1,191,934	0.36%	F

Demographics & Housing Statistics

U.S. Census Bureau data (2024)

### Market Analysis for ZIP Code 95116 (San Jose, CA) #### Section 8 Voucher Dynamics In ZIP code 95116, the Fair Market Rent (FMR) for a two-bedroom apartment is set at $2820 per month for 2026. This amount represents 39.4% of the median household income of $85,818. However, the actual rental market in this area is significantly higher. The Zillow median price for a two-bedroom home is $745,406, which translates into a monthly rent that would be much higher than the FMR. The price-to-FMR ratio is 22.0x, indicating that the actual rental prices are far above the FMR levels. This means that tenants using Section 8 vouchers face significant constraints in finding suitable housing. The voucher amount of $2820 is likely insufficient to cover the actual rent in most cases, making it difficult for voucher holders to secure housing without additional financial support. Landlords in this area might also be hesitant to accept Section 8 vouchers due to the high disparity between the FMR and actual rental rates. #### Affordability & Renter Profile ZIP 95116 has a population of 48,042, with 57.6% of residents being renters. The occupancy rate stands at 95.8%, suggesting a very tight rental market. Given the high proportion of renters and the occupancy rate, there is a strong demand for rental properties in this area. However, the affordability of these properties is a major concern. With the median household income at $85,818, many residents may struggle to afford the high rental prices, especially those relying on Section 8 vouchers. The high price-to-FMR ratio indicates that the market is overpriced relative to what the government considers fair. This suggests that the rental market is highly competitive and not easily accessible to lower-income individuals. The median income is relatively modest compared to the high rental costs, leading to a challenging environment for both renters and landlords. #### Investor Angle From an investor perspective, the ZIP code 95116 presents a mixed picture. While the occupancy rate is high, indicating strong demand, the actual rental prices are well above the FMR levels. For a two-bedroom unit, the FMR is $2820, but the actual rental price based on the Zillow median would be approximately $3000-$3500 per month, given typical rental yields. This means that investors who rely solely on FMR to determine rental rates will likely see negative cash flow. However, the tight market and high occupancy rate suggest that there is potential for rental income growth if investors can find properties below the Zillow median price or negotiate better terms with tenants. The investment grade in this ZIP code is moderate to low due to the high cost of entry and the risk associated with accepting Section 8 vouchers at FMR rates. #### Specific Actionable Insights 1. **Target Lower-Rent Properties**: Investors should focus on acquiring properties with rental rates closer to the FMR levels. For example, a two-bedroom property renting at $2820 per month would be more aligned with the FMR and could potentially attract Section 8 voucher holders. This strategy would help mitigate the risk of negative cash flow. 2. **Consider Mixed-Income Developments**: Developing or investing in mixed-income housing projects could be a viable option. By offering a mix of units at different price points, including some at FMR levels, investors can cater to a broader range of tenants, including those with Section 8 vouchers. This approach would balance the need for affordable housing with the potential for higher rental income from other units. 3. **Engage with Local Housing Authorities**: Building relationships with local housing authorities can provide insights into future funding and policy changes that might affect the rental market. Additionally, understanding the specific requirements and processes for accepting Section 8 vouchers can help streamline the leasing process and reduce administrative overhead. #### Bottom Line Given the high price-to-FMR ratio and the challenges faced by Section 8 voucher holders in securing housing, the recommendation for Section 8-focused investors in ZIP code 95116 is to **Skip**. The market conditions make it difficult to achieve positive cash flow while adhering strictly to FMR guidelines. Instead, investors should consider areas with a more favorable price-to-FMR ratio or explore alternative investment strategies that do not rely exclusively on Section 8 vouchers.

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.