Section 8 Fair Market Rent (FMR) for ZIP 96720 - 2027

Investment Score for ZIP 96720

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	$1,490
1 Bedroom	$1,500
2 Bedrooms	$1,930
3 Bedrooms	$2,430
4 Bedrooms	$2,730
5 Bedrooms	$3,167
6 Bedrooms	$3,547
7 Bedrooms	$3,831
8 Bedrooms	$4,023

Investment Analysis by Bedroom Size

Zillow median home prices vs Section 8 FMR rates (Data: 2026-08-31)

Bedrooms	Monthly FMR	Median Price	1% Rule	Grade
1BR	$1,500	$281,318	0.53%	F
2BR	$1,930	$437,029	0.44%	F
3BR	$2,430	$555,302	0.44%	F
4BR	$2,730	$675,086	0.4%	F
5BR	$3,167	$711,763	0.44%	F

Demographics & Housing Statistics

U.S. Census Bureau data (2024)

### Market Analysis for ZIP Code 96720 (Hilo, HI) #### Section 8 Voucher Dynamics The Fair Market Rent (FMR) for ZIP code 96720, as per the 2026 estimates, is set at $1900 for a two-bedroom unit. This amount represents 28.2% of the median household income of $80,938, indicating that it is a reasonable rent level for many residents. However, the actual rental market in Hilo is significantly higher. For instance, the Zillow median price for a two-bedroom unit is $434,982, which translates into a monthly rental cost of approximately $1,812 based on typical mortgage payments (assuming a 4.5% interest rate). This means that the actual rental costs are roughly 19.1 times the FMR, making it challenging for Section 8 voucher holders to find suitable housing within their budget. The constraints for voucher holders include limited availability of units that accept vouchers and a significant gap between the FMR and actual rental prices, which can lead to difficulties in securing affordable housing. #### Affordability & Renter Profile ZIP code 96720 has a population of 52,979, with 33.5% of residents being renters. The occupancy rate stands at 91.8%, suggesting that the rental market is relatively tight, with few vacancies available. Given the high median household income of $80,938, many residents can afford the higher rental costs, but this also implies that there is a substantial portion of the population who might struggle with the current market conditions. The high price-to-FMR ratio of 19.1x indicates that the market is overpriced relative to what the government considers fair, leading to affordability issues for lower-income households. Consequently, the rental market is likely to be competitive, with landlords having the upper hand due to the scarcity of available units. #### Investor Angle From an investor perspective, the ZIP code 96720 presents a mixed picture. While the FMRs provide a benchmark for rental pricing, the actual market rates are much higher. A two-bedroom unit renting at the FMR of $1900 would be significantly below market value, potentially leading to low occupancy rates or difficulty in attracting tenants. On the other hand, properties rented at market rates could generate strong cash flows, but they would not be suitable for Section 8 voucher holders due to the high price-to-FMR ratio. To determine the investment grade, we need to consider the potential returns versus the risks. The high median home value and rental prices suggest that the area is desirable and has a strong demand base. However, the challenge lies in finding a balance between market rates and FMRs. If an investor aims to cater specifically to Section 8 voucher holders, they must ensure that the rents do not exceed the FMR limits, which could mean accepting lower-than-market rents. This would likely result in a negative cash flow unless the property is purchased at a discount or has very low operating costs. Therefore, the investment grade for Section 8-focused investors in this ZIP code is moderate to low, given the constraints imposed by the FMR. #### Specific Actionable Insights 1. **Targeting Affordable Units**: Investors should focus on acquiring properties that are already priced close to or below the FMR. For example, a two-bedroom unit renting at $1900 or less would be ideal for Section 8 voucher holders. This strategy would require careful selection and possibly negotiating with sellers to secure properties at a lower price point. 2. **Government Subsidies**: Consider leveraging government subsidies and programs designed to support affordable housing. These programs can help offset the financial burden of renting at FMR levels and improve the overall profitability of the investment. Additionally, partnering with local organizations that assist low-income families could provide additional resources and support. 3. **Diversification Strategy**: To mitigate risk, investors might consider diversifying their portfolio by including a mix of market-rate and FMR-priced units. This approach allows them to benefit from the higher cash flows generated by market-rate rentals while still providing affordable housing options for those relying on Section 8 vouchers. #### Bottom Line Given the high price-to-FMR ratio and the tight rental market in ZIP code 96720, the recommendation for Section 8-focused investors is to **Skip** this market. The current rental prices far exceed the FMR, making it difficult for voucher holders to find suitable housing. Additionally, the high market rates indicate that properties rented at FMR levels would likely experience low occupancy rates or face challenges in attracting tenants. Investors interested in this ZIP code should consider alternative strategies that align with market realities or look for areas with a more favorable price-to-FMR ratio.

Data Sources: FMR data from HUD (2027). Median home prices from Zillow (2026-08-31). 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.