The Official Definition
Fair Market Rent (FMR) is a dollar amount set annually by the U.S. Department of Housing and Urban Development (HUD) that represents the cost to rent a moderately-priced dwelling unit in a given area. FMRs are established for different bedroom sizes — from efficiency apartments to 4-bedroom units — for every metropolitan area and non-metropolitan county in the United States.
The statutory definition: FMR is the 40th percentile of gross rents (including utilities) for standard quality rental housing units recently occupied by movers in a local housing market. This means 60% of comparable rentals cost more than the FMR, and 40% cost less.
Why the 40th Percentile?
HUD uses the 40th percentile — not the median (50th percentile) — deliberately. The goal is to give housing voucher holders access to a reasonable range of housing, not just the cheapest units on the market. A 40th percentile FMR means voucher holders can afford more than the cheapest 40% of rentals, giving them meaningful choice.
In some high-cost areas, HUD publishes Small Area Fair Market Rents (SAFMRs), which set FMRs at the ZIP code level instead of the metro area level. This provides more precise payment standards in cities where rents vary dramatically by neighborhood.
How FMR Is Calculated
HUD calculates FMRs using two main data sources:
- American Community Survey (ACS) — the Census Bureau's annual survey of housing costs, used as the base estimate
- CPI rent index — used to update the ACS figures to reflect current market conditions
The calculation process:
- HUD identifies recent movers (households that moved in the past 15 months) to capture current market rents rather than long-term tenant rents
- Gross rents (contract rent + utilities) are collected and ranked
- The 40th percentile value is selected as the FMR
- Values are adjusted annually using local CPI data
FMR by Bedroom Size
HUD publishes FMRs for five unit sizes. The 2-bedroom FMR is the base unit; others are calculated from it using fixed bedroom ratios:
| Unit Size | Typical FMR Multiple of 2BR |
|---|---|
| Efficiency (studio) | ~0.77× |
| 1 Bedroom | ~0.90× |
| 2 Bedroom (base) | 1.00× |
| 3 Bedroom | ~1.24× |
| 4 Bedroom | ~1.47× |
Why FMR Matters for Section 8 Vouchers
FMRs directly determine housing voucher payment standards under the Housing Choice Voucher (HCV) program (commonly called Section 8). Public Housing Authorities (PHAs) set their payment standards at 90–110% of the local FMR. When a voucher holder finds housing, the PHA pays the difference between 30% of the household's income and the actual rent, up to the payment standard.
If a unit's rent exceeds the payment standard, the tenant can still choose to rent it — but they must pay the difference out of pocket in addition to their 30% contribution.
FY2024 Changes and Updates
HUD updates FMRs annually, typically releasing new values in August for the following fiscal year (which runs October 1 – September 30). FY2024 FMRs reflected continued rent increases in most markets, with particularly large increases in Sun Belt metros like Phoenix, Austin, and Nashville. Some coastal markets saw modest decreases as rent growth moderated.
You can look up your area's current FMR using our database, which is updated with each new HUD release.