Section 8 Fair Market Rent (FMR) for ZIP 95124 - 2027

Investment Score for ZIP 95124

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	$2,520
1 Bedroom	$2,840
2 Bedrooms	$3,350
3 Bedrooms	$4,500
4 Bedrooms	$4,800
5 Bedrooms	$5,568
6 Bedrooms	$6,236
7 Bedrooms	$6,735
8 Bedrooms	$7,072

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	$2,840	$607,384	0.47%	F
2BR	$3,350	$894,409	0.37%	F
3BR	$4,500	$1,797,370	0.25%	F
4BR	$4,800	$2,092,090	0.23%	F
5BR	$5,568	$2,471,577	0.23%	F

Demographics & Housing Statistics

U.S. Census Bureau data (2024)

### Market Analysis for ZIP Code 95124 (San Jose, CA) #### Section 8 Voucher Dynamics The Fair Market Rent (FMR) for ZIP code 95124 in San Jose, CA, is set by HUD for 2026. For a two-bedroom apartment, the FMR is $3,670. However, this figure needs to be compared against the actual rental market to understand how it impacts Section 8 voucher holders. According to the data provided, the Zillow median price for a two-bedroom home in this area is $922,546, which translates into a rental cost that is significantly higher than the FMR. The price-to-FMR ratio is 20.9x, indicating that the actual rental costs are much higher than what is considered fair market rent. This disparity means that voucher holders face significant constraints. They can only afford units priced at or below the FMR, which is far lower than the typical rental rates in the area. For instance, a three-bedroom unit has an FMR of $4,850, but the average rental price would likely be much higher given the high price-to-FMR ratio. This makes it challenging for voucher holders to find suitable housing, especially in a competitive market like San Jose. #### Affordability & Renter Profile ZIP code 95124 is part of Santa Clara County, which is known for its high cost of living and strong economy driven by tech companies. The median household income in this ZIP code is $185,926, reflecting a relatively affluent population. With 29.1% of residents being renters, the rental market is quite active, but it is also very tight due to the high occupancy rate of 96.8%. This suggests that there is little vacancy, making it difficult for new tenants to enter the market. Given the high median income and the tight rental market, most renters in this ZIP code are likely to be professionals working in the tech industry or other high-paying sectors. These individuals can afford the high rental prices, which are well above the FMR. The affordability issue is particularly acute for low-income families who rely on Section 8 vouchers. At 23.7% of the median income, the FMR for a two-bedroom unit is already quite high, but it still falls short of the actual rental costs. #### Investor Angle From an investor’s perspective, the ZIP code 95124 presents a mixed picture. While the rental market is robust and demand is high, the actual rental prices are significantly higher than the FMR. This means that properties rented out at FMR levels would likely generate negative cash flow if they were priced according to the Zillow median. For example, a two-bedroom property priced at $922,546 would have a monthly rental cost around $7,688 based on a typical mortgage payment (assuming a 4% interest rate and a 30-year term), which is more than double the FMR of $3,670. However, the high occupancy rate and strong demand suggest that investors could potentially achieve positive cash flow by targeting the broader rental market rather than relying solely on Section 8 vouchers. Given the high median income and the concentration of tech workers, there is a substantial pool of potential tenants willing to pay premium rents. In terms of investment grade, ZIP code 95124 is rated highly due to its strong economic base and high demand for rentals. However, the reliance on Section 8 vouchers alone would not be financially viable for most investors. Instead, investors should consider a diversified strategy that includes both market-rate rentals and Section 8 properties. #### Specific Actionable Insights 1. **Target Premium Rentals**: Given the high price-to-FMR ratio, investors should focus on renting properties at market rates rather than FMR levels. A two-bedroom unit priced at the Zillow median of $922,546 would generate a monthly rental income of approximately $7,688, which is significantly higher than the FMR of $3,670. This approach would ensure positive cash flow and align with the local economic conditions. 2. **Consider Mixed-Income Developments**: Investors could explore developing mixed-income housing projects where a portion of the units are reserved for Section 8 voucher holders, while the majority are rented at market rates. This would allow them to balance financial viability with social responsibility. For instance, allocating 20% of units for Section 8 tenants would provide affordable housing options while the remaining 80% could be rented at market rates to cover the overall expenses. 3. **Utilize Tax Credits and Incentives**: To make Section 8-focused investments more feasible, investors should look into federal and state tax credits and incentives designed to support affordable housing. These programs can help offset some of the financial challenges associated with renting at FMR levels. #### Bottom Line For investors focusing specifically on Section 8 properties, ZIP code 95124 is not recommended due to the significant gap between FMR and actual rental prices. The high price-to-FMR ratio of 20.9x indicates that properties rented out at FMR levels would likely result in negative cash flow. Therefore, the recommendation is to **Skip** this ZIP code for Section 8-focused investments. However, for investors looking to diversify their portfolio and include a mix of market-rate and Section 8 properties, ZIP code 95124 offers a strong economic foundation and high demand for rentals. In such cases, a **Hold** recommendation might be appropriate, provided that the investment strategy includes a substantial number of market-rate units to offset the financial constraints of Section 8 properties.

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.