Section 8 Fair Market Rent (FMR) for ZIP 95132 - 2027

Investment Score for ZIP 95132

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	$2,730
1 Bedroom	$3,080
2 Bedrooms	$3,630
3 Bedrooms	$4,880
4 Bedrooms	$5,200
5 Bedrooms	$6,032
6 Bedrooms	$6,756
7 Bedrooms	$7,296
8 Bedrooms	$7,661

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	$3,080	$495,936	0.62%	D
2BR	$3,630	$677,350	0.54%	F
3BR	$4,880	$1,503,770	0.32%	F
4BR	$5,200	$1,669,055	0.31%	F
5BR	$6,032	$1,881,029	0.32%	F

Demographics & Housing Statistics

U.S. Census Bureau data (2024)

### Market Analysis for ZIP Code 95132 (San Jose, CA) #### Section 8 Voucher Dynamics The Fair Market Rent (FMR) for ZIP code 95132 is set by HUD for the year 2026. For a two-bedroom apartment, the FMR is $3870 per month. However, it is important to understand how this compares to actual rents in the area. According to Zillow, the median price for a two-bedroom home in this ZIP code is $707,416, which translates to a monthly rental cost of approximately $3,114 based on typical mortgage rates and property taxes. This suggests that the actual rent for a two-bedroom unit could be significantly higher than the FMR, potentially creating constraints for voucher holders. The price-to-FMR ratio of 15.2x indicates that the market rent is far above the FMR, making it challenging for Section 8 tenants to find affordable housing. #### Affordability & Renter Profile ZIP code 95132 has a population of 40,334, with 26.0% of residents being renters. The occupancy rate stands at 96.7%, indicating a tight market where most available units are occupied. Given the median household income of $178,611, the area is quite affluent, and the high rent-to-income ratio suggests that it is primarily attractive to high-income earners. The fact that 2BR FMR is only 26.0% of the median income highlights the significant financial burden that renting places on lower-income households. This tight market condition means that there is little room for oversupply, and any new rental units are likely to be quickly absorbed. #### Investor Angle From an investor perspective, the ZIP code 95132 presents a mixed picture when considering the FMR. While the FMR for a two-bedroom unit is $3870, the actual market rent is much higher, around $707,416 for a median-priced home. This implies that properties rented at the FMR level would likely generate negative cash flow if purchased at market value. However, if an investor can acquire a property below the median price, there might still be opportunities for positive cash flow. To determine the investment grade, we need to consider factors such as vacancy rates, rental demand, and the overall economic health of the area. With an occupancy rate of 96.7%, the vacancy rate is low, suggesting strong rental demand. However, the high price-to-FMR ratio indicates that the market is not aligned with the FMR, making it difficult for Section 8 voucher holders to find suitable housing. This mismatch between FMR and market rent could affect the ability of investors to attract and retain Section 8 tenants. #### Specific Actionable Insights 1. **Target Lower-Priced Properties**: Investors should focus on acquiring properties that are priced below the median market value. For instance, a two-bedroom home priced at $500,000 would have a monthly rental cost of approximately $2,381, which is closer to the FMR of $3870. This would allow for better alignment with Section 8 voucher limits and potentially generate positive cash flow. 2. **Consider Smaller Units**: Given the high price-to-FMR ratio, smaller units like one-bedroom apartments might be more aligned with the FMR. The FMR for a one-bedroom unit is $3310, and the actual market rent for a one-bedroom unit is likely lower than for a two-bedroom unit. Therefore, investing in one-bedroom units could provide a better fit for Section 8 tenants and improve the chances of finding occupants. 3. **Explore Multi-Family Developments**: Multi-family developments often offer a range of unit sizes and can cater to various income levels. By developing multi-family units that include both one-bedroom and two-bedroom options, investors can better align with the FMR while also catering to the broader rental market. This diversification strategy can help mitigate risks associated with a single-unit type. #### Bottom Line Given the high price-to-FMR ratio and the tight market conditions, the recommendation for Section 8-focused investors is to **Skip** this ZIP code unless they can acquire properties at significantly below market value. The current dynamics make it challenging to operate profitably within the FMR guidelines, and the high median household income suggests that the area is primarily suited for higher-income renters. Therefore, unless investors can find unique opportunities to purchase below the median market value, this ZIP code is not ideal for Section 8 investments.

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.