Fair Market Rent (FMR)

What Is Fair Market Rent?

Fair market rent (FMR) is the U.S. Department of Housing and Urban Development’s (HUD) estimate of the cost of a modest rental home in a given housing market. It is not the average rent or the rent a landlord must charge. It is a benchmark HUD uses to set how much several federal housing programs will pay.

HUD publishes separate FMRs for efficiencies and for one- through four-bedroom units. Each covers a metropolitan area defined by the Office of Management and Budget, a HUD-defined subdivision of one, or a non-metropolitan county.

How Fair Market Rent Works

Under HUD’s regulation, an FMR is an estimate of gross rent: rent plus the cost of utilities other than telephone. HUD generally sets it at the 40th percentile. That is the amount below which 40% of standard-quality rental units in the area rent. The distribution comes from units occupied by recent movers, with public housing and substandard units excluded.

HUD builds the estimates from Census Bureau American Community Survey data, then updates them with rent and utility inflation measures, including private-sector rent data, and with local rent surveys where available. Two other rules apply:

• A floor on declines. An FMR generally cannot fall below 90% of the previous year’s figure.
• Timing. Federal law requires FMRs to be posted at least 30 days before they take effect, at the start of the federal fiscal year (generally October 1). HUD published the FY 2027 FMRs on September 1, 2026, to take effect October 1, 2026.

What FMRs Are Used For

FMRs feed into many HUD programs, including:

• Payment standards in the Housing Choice Voucher program
• Initial renewal rents for some expiring project-based Section 8 contracts
• Rent ceilings in the HOME program and Emergency Solutions Grants
• Maximum award and rent amounts in the Continuum of Care program
• Flat rents in public housing

Example

Suppose a metro area’s two-bedroom FMR is $1,500. That figure means roughly 40% of standard-quality two-bedroom units recently rented for less, including utilities, and 60% for more. A local housing agency could then set its two-bedroom voucher payment standard anywhere from $1,350 to $1,650 without asking HUD.

Criticisms and Limitations

Because one FMR covers an entire metro area, it can be too low for expensive neighborhoods and too high for cheaper ones. Voucher holders may then end up concentrated in lower-cost, higher-poverty areas. HUD’s response is the Small Area FMR, calculated by ZIP Code. FMRs also start from survey data that is more than a year old. HUD adjusts the figures forward, but they can still lag behind fast-rising rents.

To look up the FMR for your area, use HUD’s FMR documentation system on the HUD User website.