Section 8 Fair Market Rent (FMR) for ZIP 95122 - 2027

Investment Score for ZIP 95122

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	$2,060
1 Bedroom	$2,330
2 Bedrooms	$2,740
3 Bedrooms	$3,680
4 Bedrooms	$3,930
5 Bedrooms	$4,559
6 Bedrooms	$5,106
7 Bedrooms	$5,514
8 Bedrooms	$5,790

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	$2,330	$422,481	0.55%	F
2BR	$2,740	$572,408	0.48%	F
3BR	$3,680	$938,465	0.39%	F
4BR	$3,930	$1,056,119	0.37%	F
5BR	$4,559	$1,128,452	0.4%	F

Demographics & Housing Statistics

U.S. Census Bureau data (2024)

### Market Analysis for ZIP Code 95122 (San Jose, CA) #### Section 8 Voucher Dynamics The Fair Market Rent (FMR) for ZIP code 95122 is set by HUD for 2026, with the following rates: - 0BR: $2120 - 1BR: $2410 - 2BR: $2820 (32.7% of median income) - 3BR: $3730 - 4BR: $4060 These FMRs represent the maximum amount that a Section 8 voucher holder can pay for rent. However, the actual rental market in San Jose, particularly in ZIP code 95122, is significantly higher. For instance, the Zillow median price for a 2BR unit is $593,617, which translates to a monthly rental cost of approximately $2820 based on typical mortgage payments and property taxes. This means that the FMR for a 2BR unit is exactly at the median rental cost, indicating that voucher holders might find it challenging to secure housing without landlords absorbing additional costs. Given the occupancy rate of 94.9%, there is a high demand for rental units, making it difficult for voucher holders to find properties within their budget. The FMRs are set below the actual market rates, especially considering the high median household income of $103,549. This suggests that landlords may be hesitant to accept vouchers unless they receive some form of subsidy beyond the FMR. #### Affordability & Renter Profile ZIP code 95122 has a population of 50,775, with 46.6% being renters. This indicates a significant portion of the population relies on rental housing. Given the high median household income, many residents likely have the financial capability to afford market-rate rents. However, the remaining 46.6% of renters, who may include families with lower incomes, face substantial challenges in finding affordable housing. The median income of $103,549 suggests that the average resident can afford higher rents, but the FMR for a 2BR unit is only 32.7% of this median income. This implies that while the FMR is relatively low compared to the median income, it still represents a significant portion of a family’s budget. Therefore, the market is tight, with limited options for low-income families seeking affordable housing. #### Investor Angle From an investor perspective, the ZIP code 95122 presents a mixed picture. The FMRs are set at levels that are well below the actual market rates, as evidenced by the Zillow median price for a 2BR unit being $593,617. This translates to a price-to-FMR ratio of 17.5x, indicating that the median home value is nearly 18 times the FMR for a similar-sized rental unit. To determine if this ZIP code is cash-flow positive at FMR, we need to consider the typical mortgage payment and other expenses associated with owning a property. Assuming a 30-year fixed-rate mortgage at 5% interest, the monthly payment for a $593,617 home would be around $3000, excluding property taxes and insurance. If the FMR for a 2BR unit is $2820, then the landlord would need to cover the difference between the mortgage payment and the FMR, which is approximately $180 per month. This makes the investment less attractive unless there are additional subsidies or incentives available. The investment grade for this ZIP code is moderate to low due to the high price-to-FMR ratio and the potential need for landlords to absorb additional costs. Additionally, the tight rental market and high occupancy rate suggest that there is a risk of vacancy if landlords rely solely on Section 8 vouchers. #### Specific Actionable Insights 1. **Focus on Smaller Units**: Given the high price-to-FMR ratio, investors should focus on smaller units such as 0BR and 1BR apartments. The FMR for these units is $2120 and $2410 respectively, which are closer to the actual rental market rates. This reduces the gap between the FMR and the actual mortgage payment, making the investment more viable. 2. **Seek Additional Subsidies**: Investors should look into additional government programs or local subsidies that can help offset the difference between the FMR and the actual mortgage payment. This could include state-level housing assistance programs or partnerships with non-profit organizations that support affordable housing initiatives. 3. **Consider Mixed-Income Developments**: Developing mixed-income properties where a portion of units are reserved for Section 8 voucher holders and the rest are rented at market rates can balance out the financial impact. For example, a 2BR unit at FMR ($2820) would be offset by renting another 2BR unit at the median market rate ($2820), ensuring overall profitability. #### Bottom Line For Section 8-focused investors, the recommendation is to **Skip** this ZIP code unless they can secure additional subsidies or develop mixed-income properties. The high price-to-FMR ratio and the tight rental market make it challenging to achieve positive cash flow purely through Section 8 vouchers. Investors should consider other ZIP codes with lower price-to-FMR ratios or explore alternative investment strategies that combine affordable and market-rate rentals.

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.