What is Fair Market Rent?

Fair Market Rent

Fair Market Rent is the rent amount, including utilities (except telephone), to rent privately owned, existing, decent, safe and sanitary rental housing of modest (non-luxury) nature with suitable amenities.

The Fair Market Rent rate established by Department of Housing and Urban Development (HUD) to be used as a basis for paying federal housing assistance programs like the Housing Choice Voucher Program (often called "Section 8") 24 CFR Part 888. Fair Market Rent is determined by conducting a nationwide survey each year. FMR prices are gross rent prices which means they include utilities.

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Fair Market Rent prices are set for each county and metro area across the country. Rates are set for zero-bedroom studios or efficiencies all the way up to 4-bedroom homes. To determine the Fair Market Rent for a home with more than 4-bedrooms add 15% for each additional bedroom. For example, a 4-bedroom home in Arlington, VA in 2017 is $2,855 / mo. Each additional bedroom would be $2,855 x 0.15 = $428.25. So Fair Market Rent for a 5-bedroom home would be $2,855 + $428.25 = $3,283.25 / mo.

Fair Market Rent (FMR) is defined as the 40th percentile of rents paid by recent movers (renters who moved in the last 24 months) in a given FMR area. This means FMR rent prices are slightly below the median price. The median rent would be the 50th percentile. Note that some FMR areas have been designated as 50th percentile regions as set forth in 24 CFR ยง982.503(e). In the 50th percentile regions the Fair Market Rent is the median. 50th percentile regions are noted throughout this site.

How is Fair Market Rent Determined?

Fair Market Rent is determined by the Department of Housing and Urban Development (HUD) each fiscal year. The HUD conducts careful surveys each year to determine the distribution of rents paid by recent movers across the entire country.

The HUD's survey methodology has been over the years to reduce any bias in the survey results. Data is collected primarily by Random Digit Dialing (RDD) phone surveys. Due to certain limitations and potential bias, the HUD now conducts their survey via phone and mail questionnaires. The HUD previously required 200 survey responses for each FMR area. They now only require 100 survey responses per area.

The HUD's FMR survey is not restricted by the Do Not Call registry. Although some may object, this reduces sampling bias.

Fair Market Rent and Payment Standards?

Payment standard is the maximum monthly assistance payment for a family assisted in the voucher program (before deducting the total tenant payment by the family). Total Tenant Payment (TTP) is the amount a family receiving housing assistance is required to contribute to rent and utilities.

Payment Standard = Fair Market Rent - Total Tenant Payment

The Public Housing Authority (PHA) in a given region is required to use the HUD Fair Market Rent prices as a guideline for determining payment standards. But the PHA is given some flexibility and are allowed to establish the payment standard amount in an area at any level between 90 percent and 110 percent of the published FMR.