Location: Seattle-Bellevue, WA | Metro: Seattle-Bellevue, WA HUD Metro FMR Area
Based on 1% Rule: A+ (≥1.5%) | A (≥1.2%) | B (≥1.0%) | C (≥0.8%) | D (≥0.6%) | F (<0.6%)
| Unit Size | Monthly FMR |
|---|---|
| Studio | $2,470 |
| 1 Bedroom | $2,570 |
| 2 Bedrooms | $3,010 |
| 3 Bedrooms | $3,920 |
| 4 Bedrooms | $4,670 |
| 5 Bedrooms | $5,417 |
| 6 Bedrooms | $6,067 |
| 7 Bedrooms | $6,552 |
| 8 Bedrooms | $6,880 |
Zillow median home prices vs Section 8 FMR rates (Data: 2026-07-31)
| Bedrooms | Monthly FMR | Median Price | 1% Rule | Grade |
|---|---|---|---|---|
| 1BR | $2,570 | $423,676 | 0.61% | D |
| 2BR | $3,010 | $725,745 | 0.41% | F |
| 3BR | $3,920 | $1,870,271 | 0.21% | F |
| 4BR | $4,670 | $2,424,674 | 0.19% | F |
| 5BR | $5,417 | $2,944,234 | 0.18% | F |
U.S. Census Bureau data (2024)
In evaluating the viability of investing in ZIP code 98040, which encompasses Mercer Island, WA, several key concerns arise regarding the financial feasibility of rental properties under the Section 8 program. One immediate objection is whether the Fair Market Rent (FMR) of $3,400 for the fiscal year 2024 will sufficiently cover the mortgage payments on a median-priced home valued at $2,327,615. The short answer is no; a mortgage on such a property would likely exceed the FMR. However, it's important to note that the median home value is an outlier in this context, as Section 8 typically targets more affordable housing units. For a smaller, more typical Section 8 property, the FMR could indeed be adequate.
The second objection pertains to the level of renter demand, which stands at 33.0%. This percentage suggests a moderate market for renters, but it's crucial to understand that demand alone does not guarantee occupancy. While the 33.0% figure indicates that a significant portion of the population might be interested in renting, the actual number of qualified applicants for Section 8 properties must be considered. In Mercer Island, the relatively high cost of living could limit the pool of eligible tenants, despite the overall rental demand being present.
A final concern is the ability of Section 8 vouchers to keep up with the market rents, currently averaging $2,706. The data shows that the FMR of $3,400 is higher than the average market rent, suggesting that vouchers should cover the typical rent in the area. However, this does not account for potential increases in market rents or changes in voucher policies. Landlords should monitor these trends closely to ensure continued profitability.
To summarize, while the FMR of $3,400 may not cover mortgages on luxury homes, it can support more modest properties. Renter demand at 33.0% is promising but requires careful consideration of the eligibility criteria for Section 8 tenants. Lastly, vouchers should cover the current market rents, though vigilance is necessary to adapt to future changes.
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.