Section 8 Fair Market Rent (FMR) for ZIP 95240 - 2027

Investment Score for ZIP 95240

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	$1,440
1 Bedroom	$1,530
2 Bedrooms	$1,900
3 Bedrooms	$2,630
4 Bedrooms	$3,180
5 Bedrooms	$3,689
6 Bedrooms	$4,132
7 Bedrooms	$4,463
8 Bedrooms	$4,686

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	$1,530	$245,693	0.62%	D
2BR	$1,900	$362,223	0.52%	F
3BR	$2,630	$480,790	0.55%	F
4BR	$3,180	$596,815	0.53%	F
5BR	$3,689	$736,585	0.5%	F

Demographics & Housing Statistics

U.S. Census Bureau data (2024)

### Market Analysis for ZIP Code 95240 (Lodi, CA) #### Section 8 Voucher Dynamics The Fair Market Rent (FMR) for ZIP code 95240 is set by HUD and serves as a benchmark for determining the maximum rent that can be charged to Section 8 voucher holders. For 2026, the FMRs are as follows: - 0BR: $1220 - 1BR: $1320 - 2BR: $1650 (which is 24.1% of the median household income) - 3BR: $2290 - 4BR: $2770 These figures represent the maximum allowable rent for units of each size category under the Section 8 program. However, it's important to understand how these FMRs compare to actual rents in the area. According to Zillow, the median price for a 2BR home in Lodi is $365,254, which translates to a monthly mortgage payment of approximately $1,840 assuming a 30-year fixed-rate mortgage at 4.5%. This means that the actual rental rates in the area are significantly higher than the FMRs. For instance, the FMR for a 2BR unit is $1650, while the typical mortgage payment would be around $1,840. This indicates that landlords who accept Section 8 vouchers might face challenges in covering their mortgage payments if they rely solely on the FMR. The price-to-FMR ratio of 18.4x suggests that the actual market rents are much higher than the FMRs, creating a significant gap between what voucher holders can afford and what landlords need to charge to break even. #### Affordability & Renter Profile ZIP code 95240 has a population of 50,517, with nearly half (49.0%) of the residents being renters. This high percentage of renters underscores the importance of affordable housing options in the area. The occupancy rate stands at 92.6%, indicating that there is a strong demand for rental properties. Given that the median household income is $82,137, the FMR for a 2BR unit at $1650 represents only 24.1% of the median income, making it relatively affordable for many households. However, the actual market rents are likely to be higher, putting pressure on lower-income families who may not qualify for Section 8 assistance. The tight market conditions suggest that there is a limited supply of affordable rental units available, particularly those that fall within the FMR guidelines. This scarcity could lead to increased competition among tenants for affordable units, potentially driving up rents beyond the FMR levels. Additionally, the high occupancy rate implies that any new rental units entering the market will likely be quickly occupied, further tightening the supply-demand balance. #### Investor Angle From an investor perspective, the ZIP code 95240 presents both opportunities and challenges. The FMRs are designed to ensure that low-income families can afford housing, but they do not necessarily reflect the true market value of rental properties. As mentioned earlier, the Zillow median for a 2BR home is $365,254, which translates to a monthly mortgage payment of about $1,840. This is significantly higher than the FMR of $1650, meaning that landlords accepting Section 8 vouchers would need to find other ways to cover the shortfall, such as through government subsidies or by reducing their profit margins. The investment grade for this ZIP code depends largely on the ability to attract and retain tenants who can pay the FMR. Given the high demand for rental properties and the tight market conditions, investors who can offer affordable units within the FMR guidelines may find themselves in a favorable position. However, the challenge lies in ensuring that the rental income covers the mortgage payments and other operating costs, which may require careful financial planning and possibly additional sources of funding. #### Specific Actionable Insights 1. **Focus on Smaller Units**: Given the high occupancy rate and the significant gap between FMR and market rents, investors should consider focusing on smaller units (0BR and 1BR) where the FMR is closer to the actual market rents. For example, a 1BR unit with an FMR of $1320 might still be able to generate a reasonable cash flow, especially if the property is well-maintained and located in a desirable neighborhood. 2. **Government Subsidies**: Investors should explore government subsidies and other programs that can help bridge the gap between FMR and market rents. This could include state or local housing assistance programs, tax credits, or other incentives that make it financially viable to rent out properties at the FMR. 3. **Renters' Preferences**: Understanding the preferences of the local renters is crucial. Since 49.0% of the population are renters, it's important to cater to their needs. Offering amenities like laundry facilities, parking, and energy-efficient appliances can help attract and retain tenants, even if the rent is set at the FMR. #### Bottom Line For Section 8-focused investors, the ZIP code 95240 presents a mixed picture. While there is a high demand for rental properties and a significant portion of the population relies on renting, the FMRs are substantially lower than the actual market rents. This makes it challenging to achieve positive cash flow without additional subsidies or creative financing solutions. Therefore, the recommendation is to **Hold** on existing investments and **Skip** new acquisitions unless you can secure additional funding or subsidies to cover the shortfall between FMR and market rents. If you already own properties in this area, focus on maintaining them to attract and retain tenants, and consider applying for government subsidies to improve your financial position.

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.