Section 8 Fair Market Rent (FMR) for ZIP 98125 - 2027

Investment Score for ZIP 98125

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	$2,170
1 Bedroom	$2,260
2 Bedrooms	$2,640
3 Bedrooms	$3,440
4 Bedrooms	$4,100
5 Bedrooms	$4,756
6 Bedrooms	$5,327
7 Bedrooms	$5,753
8 Bedrooms	$6,041

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	$2,260	$317,952	0.71%	D
2BR	$2,640	$603,419	0.44%	F
3BR	$3,440	$801,689	0.43%	F
4BR	$4,100	$1,000,150	0.41%	F
5BR	$4,756	$1,121,079	0.42%	F

Demographics & Housing Statistics

U.S. Census Bureau data (2024)

### Market Analysis for ZIP Code 98125 (Seattle, WA) #### Section 8 Voucher Dynamics The Fair Market Rent (FMR) for ZIP code 98125 in Seattle, WA, is set by HUD for 2026. For a two-bedroom apartment, the FMR is $2,580. However, the Zillow median price for a two-bedroom rental property in this area is $620,051, which translates to a monthly rent of approximately $21,000 based on typical mortgage payments. This results in a price-to-FMR ratio of 20.0x, indicating that actual rents are significantly higher than the FMR. This disparity means that tenants using Section 8 vouchers face significant constraints. They can only afford properties up to the FMR, which is far below the market rate. Consequently, voucher holders are limited to a small subset of available rentals, often in older or less desirable units. The high market rents also suggest that landlords might be less inclined to participate in the Section 8 program due to lower returns compared to market rates. #### Affordability & Renter Profile ZIP code 98125 has a population of 44,520, with 54.6% of residents being renters. This indicates a strong rental market, but it is also highly competitive due to the high demand for affordable housing. The occupancy rate of 93.8% suggests that the market is tight, with few vacancies available. Given the median household income of $99,868, the affordability of a two-bedroom apartment at $2,580 (which is 31.0% of median income) is relatively manageable for the average resident. However, the majority of renters in this area likely earn below the median income, making it challenging for them to find suitable housing. The high price-to-FMR ratio further exacerbates this issue, as it implies that most rental properties are priced well above what a typical voucher holder can afford. #### Investor Angle From an investor’s perspective, the ZIP code 98125 presents a mixed picture when considering cash flow at FMR levels. Given the FMR for a two-bedroom unit is $2,580, and assuming typical operating expenses of around 50% of gross rent, the net income would be approximately $1,290 per month. However, the median home value of $620,051 implies that the purchase price for a similar property would be quite high. If we consider a conservative mortgage rate of 4%, the monthly mortgage payment would be around $2,900, which exceeds the FMR. This means that an investor relying solely on FMR would likely face negative cash flow, making it unattractive from a purely financial standpoint. In terms of investment grade, the high purchase prices and low FMR relative to market rents indicate that the ZIP code is not ideal for Section 8-focused investors. The risk of vacancy and the challenge of finding willing landlords are significant barriers to entry. #### Specific Actionable Insights 1. **Target Lower-Rent Properties**: Investors should focus on acquiring properties that are already priced below market rates but still within the FMR range. For example, a one-bedroom unit with an FMR of $2,210 could potentially offer positive cash flow if purchased at a lower price point. 2. **Consider Renovation Projects**: There may be opportunities to purchase older properties at a discount and renovate them to meet FMR standards while still attracting Section 8 tenants. This approach requires careful budgeting and a thorough understanding of renovation costs versus potential rental income. #### Bottom Line For Section 8-focused investors, the ZIP code 98125 is not recommended as a primary investment target. The high market rents and low FMR create a challenging environment where cash flow is likely to be negative. Instead, investors should consider other areas with a better alignment between FMR and market rents, or explore creative strategies such as targeting lower-rent units or undertaking renovation projects to improve cash flow. In summary, the recommendation is to **skip** this ZIP code for now unless there are unique circumstances that justify the investment.

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.