public-service · fair market rent
What Is a Fair Market Rent and How Does HUD Set It?
A federal-regulation explainer on how HUD defines and calculates Fair Market Rents, and the annually required notice that makes each year's figures official.
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Updated: Sources: 3
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What matters now
- An FMR is defined by regulation as an estimate of rent plus utility costs, excluding telephone.
- FMRs are generally set at the 40th percentile of standard-quality rents in the FMR area, not the median.
- A regulatory floor keeps a new year's FMR from falling below 90 percent of the prior year's FMR for that area.
- HUD must publish new FMRs at least annually on the web and separately publish a Federal Register notice, effective October 1, with a minimum 30-day public comment and reevaluation-request window.
- The FY2027 FMR notice (91 FR 56156, HUD document number 2026-17891) was published in the Federal Register on September 1, 2026.
A Fair Market Rent (FMR) is a federal estimate of what it costs to rent standard-quality housing in a given area, and it is set on an annually required schedule defined in federal regulations. Under the Code of Federal Regulations, “Fair Market Rents (FMRs) are estimates of rent plus the cost of utilities, except telephone” (24 CFR 888.113). The level is generally pegged to the 40th percentile of rents in the area, with a built-in floor so it cannot drop too far from the prior year’s figure. It becomes official each year through a required Federal Register notice tied to an October 1 effective date. HUD’s Fiscal Year 2027 FMR notice, published September 1, 2026, illustrates this mechanism in practice.
This original record-reading guide is a general reading aid, not cited evidence. It does not depict a source record; the article text and source links provide the facts.
Key points
- An FMR is defined by regulation as an estimate of rent plus utility costs, excluding telephone.
- FMRs are generally set at the 40th percentile of standard-quality rents in the FMR area, not the median.
- A regulatory floor keeps a new year’s FMR from falling below 90 percent of the prior year’s FMR for that area.
- HUD must publish new FMRs at least annually on the web and separately publish a Federal Register notice, effective October 1, with a minimum 30-day public comment and reevaluation-request window.
- The FY2027 FMR notice (91 FR 56156, HUD document number 2026-17891) was published in the Federal Register on September 1, 2026.
Definition of Fair Market Rent
Federal regulation defines the term directly: “Fair Market Rents (FMRs) are estimates of rent plus the cost of utilities, except telephone” (24 CFR 888.113, https://www.govinfo.gov/content/pkg/CFR-2025-title24-vol4/xml/CFR-2025-title24-vol4-sec888-113.xml). This means an FMR is not simply a rent figure — it is meant to capture what a household would pay for shelter and most utilities combined, in a defined FMR area.
How the FMR level is calculated
The same regulation sets the statistical target for FMRs: “FMRs are set at the 40th percentile rent, the dollar amount below which the rent for 40 percent of standard quality rental housing units fall within the FMR area” (24 CFR 888.113, https://www.govinfo.gov/content/pkg/CFR-2025-title24-vol4/xml/CFR-2025-title24-vol4-sec888-113.xml). In other words, FMRs are anchored below the midpoint of the local rental market, not at the average or median.
That percentile target also comes with a stabilizing floor from year to year. The regulation states: “Generally, HUD will set the FMRs at the 40th percentile rent, but no lower than 90 percent of the previous year’s FMR for the FMR area” (24 CFR 888.113, https://www.govinfo.gov/content/pkg/CFR-2025-title24-vol4/xml/CFR-2025-title24-vol4-sec888-113.xml). This floor limits how sharply an area’s FMR can fall in a single year, even if the underlying 40th-percentile calculation would otherwise produce a lower number.
How FMRs become official
Setting a number is only part of the process; publication requirements determine when and how it takes legal effect. Regulation requires that “FMRs will be published at least annually by HUD on the World Wide Web, or in any other manner specified by the Secretary” (24 CFR 888.115, https://www.govinfo.gov/content/pkg/CFR-2025-title24-vol4/xml/CFR-2025-title24-vol4-sec888-115.xml).
Beyond that web posting, HUD has a separate obligation to formally announce new FMRs in the Federal Register: “HUD will publish a notice announcing the publication of the FMRs in the Federal Register, to be effective October 1 of each year, and provide for a minimum of 30 days of public comments and requested for reevaluation of the FMRs in a jurisdiction” (24 CFR 888.115, https://www.govinfo.gov/content/pkg/CFR-2025-title24-vol4/xml/CFR-2025-title24-vol4-sec888-115.xml).
The regulation also fixes a minimum lead time between that notice and its effective date: “The FMRs will become effective no earlier than 30 days after the date the notice publishes in the Federal Register” (24 CFR 888.115, https://www.govinfo.gov/content/pkg/CFR-2025-title24-vol4/xml/CFR-2025-title24-vol4-sec888-115.xml). Reading these three provisions together, a given year’s FMRs cannot take effect on paper alone — they require both a public web posting and a Federal Register notice, published with enough lead time before the October 1 target effective date.
FY2027 as a worked example
This publication mechanism is not just theoretical. HUD’s own Federal Register filing for the coming fiscal year is titled “Fair Market Rents for the Housing Choice Voucher Program, Moderate Rehabilitation Single Room Occupancy Program, and Other Programs, Fiscal Year 2027” (https://www.federalregister.gov/documents/2026/09/01/2026-17891/fair-market-rents-for-the-housing-choice-voucher-program-moderate-rehabilitation-single-room). That notice carries the Federal Register citation “91 FR 56156” (https://www.federalregister.gov/documents/2026/09/01/2026-17891/fair-market-rents-for-the-housing-choice-voucher-program-moderate-rehabilitation-single-room). It was published on September 1, 2026, under HUD document number 2026-17891 (https://www.federalregister.gov/documents/2026/09/01/2026-17891/fair-market-rents-for-the-housing-choice-voucher-program-moderate-rehabilitation-single-room) — consistent with the regulatory pattern of an annual Federal Register notice tied to the October 1 effective date.
What this article does not answer
This explainer covers only what the Code of Federal Regulations and the Federal Register establish about the definition, calculation method, and publication mechanism for Fair Market Rents. It does not state what any specific FMR dollar figure is for a particular area, because that depends on data HUD publishes separately rather than on the regulatory text itself. It does not describe what rent any individual landlord may charge a tenant, since FMRs are a program benchmark and not a rent-control figure. It does not state the payment standard a particular public housing agency has adopted, since PHAs set their own payment standards within a range tied to the FMR rather than using the FMR figure directly. It does not determine whether any specific ZIP code falls inside a Small Area FMR designation, and it does not describe the area-specific reevaluation carve-out mechanics by which a prior year’s FMR may remain in force for a named area — both of which require separate area-level HUD determinations beyond the regulatory text quoted here.
Source links
https://www.govinfo.gov/content/pkg/CFR-2025-title24-vol4/xml/CFR-2025-title24-vol4-sec888-113.xml https://www.govinfo.gov/content/pkg/CFR-2025-title24-vol4/xml/CFR-2025-title24-vol4-sec888-115.xml https://www.federalregister.gov/documents/2026/09/01/2026-17891/fair-market-rents-for-the-housing-choice-voucher-program-moderate-rehabilitation-single-room