Using fair market rent to underwrite a rental
Use the FMR to bracket the rent a voucher can pay. Take HUD’s figure for the unit’s ZIP and bedroom count, apply the 90% to 110% payment standard range, subtract the agency’s utility allowance, and you have the range of contract rent a voucher tenant can carry at the standard 30% share. Then check it against market comparables, because the agency will.
Step 1: get the right figure
Look up the ZIP. In a mandatory Small Area FMR metro, the ZIP-level figure is the one that matters. Everywhere else it is the metro or county FMR, unless the agency has opted in to ZIP rents. Use the bedroom count of the unit, and remember the voucher’s size can cap it: a family with a 2-bedroom voucher in your 3-bedroom gets the 2-bedroom standard.
Check the date too. FY 2027 figures took effect October 1, 2026, except in twelve areas and two New Hampshire ZIPs where FY 2026 figures stay in force while HUD reevaluates them. The state pages mark those.
Step 2: turn it into a contract rent
Payment standards cover rent plus utilities. If the tenant pays utilities, the agency’s allowance comes off the top.
Contract rent at the standard share = payment standard − utility allowance
A contract rent above that is allowed if the tenant pays the difference, up to the point where their share hits 40% of adjusted monthly income at move-in (24 CFR 982.508). For underwriting, don’t count on it.
Step 3: check it against the market
The agency must find your rent reasonable compared with similar unassisted units (24 CFR 982.507). Your lender’s appraiser will form a market rent opinion the same way, often on Fannie Mae’s Form 1007 for a single-family rental or Form 1025 for 2 to 4 units. If the voucher math says $1,700 and comparable units rent for $1,450, plan on $1,450.
A worked example: Columbus, Ohio, 3 bedrooms
ZIP 43229 is in the Columbus metro, a mandatory Small Area FMR area since January 1, 2025. Its FY 2027 3-bedroom SAFMR is $1,760.
- Payment standard range: $1,584 (90%) to $1,936 (110%).
- Say the agency’s utility allowance for this house is $220 a month (an example; get the real schedule from the agency).
- At a 100% standard, contract rent at the 30% share: $1,760 − $220 = $1,540. At 90%: $1,364. At 110%: $1,716.
Now the loan. Buy the house for $210,000 with a $157,500 loan at 7% over 30 years, with $3,900 a year in taxes and $1,500 in insurance (all example inputs, not quotes). Principal and interest is $1,048 a month; with taxes and insurance, PITIA is $1,498.
At $1,540 of rent the DSCR is 1.03. If a lender wanted 1.20, that rent would support about $125,300 of loan at the same rate and term. At the 90% standard ($1,364) the ratio drops to 0.91, so find out where the agency sets its standard before you count on the top of the range. Run your own numbers.
Step 4: read ten years of trend
Every state page carries ten years of each area’s 2-bedroom FMR. Two things to look for:
- Big one-year jumps or drops. They often come from HUD method or survey changes. HUD won’t let an FMR fall more than 10% in a year, and in FY 2027 Salinas CA, Rochester NY and Reading PA all hit that floor.
- The five-year change. Across all of HUD’s county and town records, the median record’s 2-bedroom FMR change from FY 2022 to FY 2027 was +38%. Compare your area with that before you assume next year looks like the last five.
What FMR won’t tell you
It says nothing about your building’s condition, the tenant, turnover or how long a voucher lease-up takes, including the inspection. Use the rental property calculator to put vacancy, repairs, management and reserves against the rent.
And it isn’t a tenant-selection tool. In many states and cities refusing a voucher holder is illegal; screen everyone by the same written criteria and see HUD’s fair housing pages.