Section 8 Fair Market Rent (FMR) for ZIP 95127 - 2027

Investment Score for ZIP 95127

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	$2,210
1 Bedroom	$2,500
2 Bedrooms	$2,940
3 Bedrooms	$3,950
4 Bedrooms	$4,210
5 Bedrooms	$4,884
6 Bedrooms	$5,470
7 Bedrooms	$5,908
8 Bedrooms	$6,203

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	$2,500	$477,288	0.52%	F
2BR	$2,940	$853,972	0.34%	F
3BR	$3,950	$1,046,213	0.38%	F
4BR	$4,210	$1,282,873	0.33%	F
5BR	$4,884	$1,459,468	0.33%	F

Demographics & Housing Statistics

U.S. Census Bureau data (2024)

### Market Analysis for ZIP Code 95127 (San Jose, CA) #### Section 8 Voucher Dynamics The Fair Market Rent (FMR) for ZIP code 95127 is set by HUD for 2026, with the following rates: - 0BR: $2260 - 1BR: $2570 - 2BR: $3000 (which represents 28.0% of the median household income) - 3BR: $3960 - 4BR: $4320 However, the actual rental market in San Jose, particularly in ZIP code 95127, is significantly higher. According to Zillow, the median price for a 2BR unit is $883,368, which translates into a monthly rent of approximately $3,680 based on typical mortgage calculations. This means that the actual rent for a 2BR unit is nearly 12.3x the FMR rate of $3000. The disparity between FMR and actual rents imposes significant constraints on voucher holders, who may struggle to find units that accept their vouchers due to the high cost of living in the area. #### Affordability & Renter Profile ZIP code 95127 has a population of 58,825, with 34.7% being renters. The occupancy rate is quite high at 93.7%, indicating a tight rental market where demand outstrips supply. Given the median household income of $128,786, it is clear that the majority of residents can afford the high rents, but there remains a substantial portion of lower-income individuals who rely on Section 8 vouchers. Despite the high median income, the affordability gap is stark. For instance, the FMR for a 2BR unit is $3000, which is only 28.0% of the median income. However, the actual rent for a 2BR unit is much higher, at around $3,680. This suggests that the market is highly competitive and that many renters must spend a disproportionately large share of their income on housing. #### Investor Angle From an investor perspective, the ZIP code 95127 presents both opportunities and challenges. The FMR rates are far below the actual market rents, making it difficult to achieve positive cash flow if relying solely on FMR rates. For example, a 2BR unit renting at FMR would generate $3000 per month, while the actual market rent is closer to $3,680. This implies that landlords who accept Section 8 vouchers might face financial pressure unless they can secure higher rents from other tenants. The investment grade in this ZIP code is likely to be moderate to low for Section 8-focused investors. The high occupancy rate indicates strong demand, but the low FMR relative to actual rents means that properties rented exclusively to voucher holders will have limited cash flow potential. Investors should consider diversifying their tenant base to include market-rate renters to balance their portfolios. #### Specific Actionable Insights 1. **Diversify Tenant Base**: Given the high actual rents and the low FMR, landlords should consider accepting a mix of Section 8 vouchers and market-rate tenants. For example, a 2BR unit could be rented to a market-rate tenant for $3,680, generating a significant surplus over the FMR of $3000. This strategy can help maintain positive cash flow and reduce dependency on government subsidies. 2. **Focus on Smaller Units**: While larger units like 3BR and 4BR are more expensive, smaller units such as 0BR and 1BR might offer better opportunities for Section 8-focused investors. The FMR for a 0BR unit is $2260, and for a 1BR unit, it is $2570. These rates are still well below the actual market rents, but the gap is less pronounced compared to larger units. Landlords could target these smaller units to attract voucher holders and potentially achieve a more balanced cash flow. #### Bottom Line For Section 8-focused investors, the ZIP code 95127 presents a challenging environment due to the significant disparity between FMR and actual market rents. The recommendation is to **Skip** this ZIP code if the primary focus is on exclusively renting to Section 8 voucher holders. Instead, investors should consider areas with a closer alignment between FMR and actual rents to ensure positive cash flow and a more sustainable investment portfolio. If investors decide to enter this market, they should adopt a diversified approach, combining Section 8 vouchers with market-rate rentals to mitigate financial risks.

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.