Section 8 Fair Market Rent (FMR) for ZIP 98226 - 2027

Investment Score for ZIP 98226

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	$1,470
1 Bedroom	$1,510
2 Bedrooms	$1,850
3 Bedrooms	$2,520
4 Bedrooms	$3,090
5 Bedrooms	$3,584
6 Bedrooms	$4,014
7 Bedrooms	$4,335
8 Bedrooms	$4,552

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	$1,510	$360,716	0.42%	F
2BR	$1,850	$480,341	0.39%	F
3BR	$2,520	$666,778	0.38%	F
4BR	$3,090	$857,523	0.36%	F
5BR	$3,584	$1,019,141	0.35%	F

Demographics & Housing Statistics

U.S. Census Bureau data (2024)

### Market Analysis for ZIP Code 98226 (Bellingham, WA) #### Section 8 Voucher Dynamics The Fair Market Rent (FMR) for ZIP code 98226 is set by HUD for 2026 as follows: - 0BR: $1430 - 1BR: $1460 - 2BR: $1760 (which represents 26.6% of the median household income of $79,375) - 3BR: $2450 - 4BR: $2950 These figures represent the maximum rent that a Section 8 voucher holder can pay for a unit of a given size. However, it is important to note that these rents are significantly lower than the actual market rents. For instance, the Zillow median price for a 2BR property in this ZIP code is $477,247, which translates to a monthly mortgage payment of approximately $2,260 based on typical financing terms (assuming a 20% down payment and a 30-year fixed-rate mortgage at 5%). This means that the FMR for a 2BR unit ($1760) is only about 78% of what a typical mortgage payment would be, indicating a significant gap between the FMR and actual market rents. The constraints for voucher holders are clear: they must find units that do not exceed the FMR. In Bellingham, where the market rents are much higher, this can be challenging. The occupancy rate of 95.6% suggests that there is little vacancy, making it even harder for voucher holders to find suitable housing. #### Affordability & Renter Profile With a median household income of $79,375, the affordability of housing in ZIP 98226 is a concern. The renter population makes up 37.6% of the total population, indicating a substantial number of individuals who rely on rental housing. Given that the FMR for a 2BR unit is only 26.6% of the median income, it is evident that many renters, especially those relying on Section 8 vouchers, struggle to find affordable housing. The high occupancy rate of 95.6% points to a tight market, suggesting that there is limited supply relative to demand. This tightness could be exacerbated by the fact that many landlords may not accept Section 8 vouchers due to the perception of lower returns compared to market rates. As a result, the competition for affordable units is likely intense, leading to potential displacement of low-income households if they cannot find units within their budget. #### Investor Angle From an investor perspective, the ZIP code 98226 presents a mixed picture. The FMRs are set well below the market rents, which means that properties rented at FMR levels will likely have negative cash flow when compared to the mortgage payments required to own them. For example, a 2BR unit rented at $1760 per month would generate less income than the typical mortgage payment of around $2,260, resulting in a shortfall of $500 per month. However, the investment grade can still be attractive for certain types of investors. Those who are willing to accept a lower return on investment and are primarily interested in long-term stability and government-backed rental agreements might find value in this market. The steady demand for affordable housing, particularly from Section 8 voucher holders, provides a reliable tenant base. Additionally, the strong overall economy of Whatcom County and the presence of institutions like Western Washington University contribute to a stable rental market. #### Specific Actionable Insights 1. **Focus on Smaller Units**: Given the price-to-FMR ratio of 22.6x for a 2BR unit, it is advisable for investors to focus on smaller units such as 0BR and 1BR apartments. These units have FMRs of $1430 and $1460 respectively, which are closer to the actual market rents for similar-sized units. This would help mitigate some of the cash flow issues associated with larger units. 2. **Consider Non-Mortgage Financing Options**: If purchasing properties outright or using alternative financing methods, such as cash or seller financing, the cash flow dynamics might improve. This would allow investors to avoid the high mortgage payments that make renting at FMR levels unprofitable. 3. **Engage with Local Housing Authorities**: Building relationships with local housing authorities can provide insights into the availability of Section 8 vouchers and potential opportunities for securing tenants. This can also help in understanding any local policies or incentives that might support affordable housing investments. #### Bottom Line For Section 8-focused investors, the recommendation for ZIP code 98226 is to **Skip** this market. The significant gap between FMR and market rents, combined with the tight occupancy rate, makes it difficult to find profitable investment opportunities. While there is a need for affordable housing, the financial constraints imposed by renting at FMR levels outweigh the benefits for most investors seeking positive cash flow. Investors should consider other markets where the FMR is closer to the actual market rents or where there is a higher supply of affordable units available.

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.