Section 8 Fair Market Rent (FMR) for ZIP 98003 - 2027

Investment Score for ZIP 98003

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	$1,840
1 Bedroom	$1,920
2 Bedrooms	$2,240
3 Bedrooms	$2,920
4 Bedrooms	$3,470
5 Bedrooms	$4,025
6 Bedrooms	$4,508
7 Bedrooms	$4,869
8 Bedrooms	$5,112

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	$1,920	$207,236	0.93%	C
2BR	$2,240	$290,742	0.77%	D
3BR	$2,920	$558,407	0.52%	F
4BR	$3,470	$681,317	0.51%	F
5BR	$4,025	$756,920	0.53%	F

Demographics & Housing Statistics

U.S. Census Bureau data (2024)

### Market Analysis for ZIP Code 98003 (Federal Way, WA) #### Section 8 Voucher Dynamics The Federal Rent (FMR) figures for ZIP code 98003 (Federal Way, WA) in 2026 are as follows: - 0BR: $1820 - 1BR: $1880 - 2BR: $2190 (which is 34.9% of the median household income) - 3BR: $2870 - 4BR: $3370 These FMRs represent the maximum amount that a Section 8 voucher holder can pay for rent. However, it is important to note that the actual rents in the area might be higher, leading to potential constraints for voucher holders. For instance, the Zillow median price for a 2BR property is $292,130, which translates to a monthly mortgage payment of approximately $1,300 based on a 4.5% interest rate over a 30-year term. This does not include property taxes, insurance, and maintenance costs, which would likely push the total cost above the FMR. Given the high price-to-FMR ratio of 11.1x, it is clear that many properties in Federal Way are priced well beyond what Section 8 vouchers can cover. This means that voucher holders face significant challenges in finding affordable housing within their budget. Landlords who accept Section 8 vouchers must ensure that their rental rates do not exceed the FMR limits, which can be a limiting factor in attracting tenants. #### Affordability & Renter Profile Federal Way has a population of 51,619, with 53.1% of residents being renters. The occupancy rate stands at 95.1%, indicating a relatively tight market where most available units are occupied. Given that 34.9% of the median household income ($75,319) goes towards a 2BR unit’s FMR, it is evident that the majority of renters in Federal Way are likely to be low to moderate-income families. The high percentage of renters and the tight occupancy rate suggest that there is a strong demand for rental properties in the area. However, the affordability issue is significant, especially for those relying on Section 8 vouchers. The median household income of $75,319 is relatively modest compared to the high cost of living in King County, making it challenging for many residents to afford housing without assistance. #### Investor Angle From an investor perspective, the key question is whether the ZIP code can generate positive cash flow at the FMR levels. To determine this, we need to consider the typical expenses associated with owning a rental property. Assuming a 2BR property costs around $292,130, the monthly mortgage payment would be approximately $1,300. Additional expenses such as property taxes, insurance, and maintenance would add another $200-$300 per month, bringing the total monthly cost to about $1,500-$1,600. At the 2BR FMR of $2190, landlords could potentially achieve a positive cash flow of $590-$690 per month, assuming they can find tenants willing to pay the FMR. However, the challenge lies in the fact that many properties are priced much higher than the FMR, and the price-to-FMR ratio of 11.1x indicates that the market is significantly overpriced relative to the FMR. The investment grade for this ZIP code would be considered medium to low due to the high price-to-FMR ratio and the limited pool of potential tenants who can only afford the FMR. Investors should carefully evaluate the local rental market dynamics and the availability of Section 8 voucher holders before making any investment decisions. #### Specific Actionable Insights 1. **Focus on Smaller Units**: Given the high price-to-FMR ratio, investors should focus on smaller units such as 0BR or 1BR apartments, which have lower FMRs. A 0BR unit at $1820 could still generate a positive cash flow if the mortgage and other expenses are kept below this amount. Similarly, a 1BR unit at $1880 could also be viable. 2. **Consider Renovation Projects**: Investors might find opportunities in older properties that can be renovated and brought up to a standard that would attract Section 8 voucher holders. By targeting properties that are currently priced above the FMR but can be improved and rented out at the FMR, investors can create value and potentially achieve positive cash flow. 3. **Evaluate Local Demand**: Conduct a thorough analysis of the local rental market to understand the demand for Section 8-friendly units. Engage with local real estate agents and property management companies to gather insights on the number of voucher holders in the area and their willingness to pay the FMR. #### Bottom Line For Section 8-focused investors, the recommendation for ZIP code 98003 (Federal Way, WA) is to **Hold**. While there are some opportunities in smaller units and renovation projects, the overall market is challenging due to the high price-to-FMR ratio. Investors should proceed with caution and conduct detailed market research before committing to any investments in this ZIP code.

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.