Small Area FMR vs metro FMR.

The problem SAFMRs were built to fix

A metro-wide fair market rent averages very different neighbourhoods into one number. Where a voucher payment standard is set from that average, it can be too low to rent in expensive ZIP codes and more generous than needed in cheap ones. HUD's Small Area FMR rule, published November 16, 2016 (81 FR 80567), replaced the old metro-wide approach in selected metropolitan areas with figures calculated for ZIP codes. Under the regulation the Small Area FMR areas are the ZIP code areas inside a designated metropolitan area, and the figure applies to tenant-based assistance in the Housing Choice Voucher program.

Where the rule is mandatory

HUD uses selection criteria spelled out in 24 CFR 888.113(c): how many vouchers are under lease in the metro area, how much of the standard-quality rental stock is in ZIP codes where the Small Area FMR is more than 110 percent of the metro FMR, how many voucher families live in concentrated low-income areas, that share relative to all renters, and the vacancy rate. A metro area that meets the test is designated, and every agency administering vouchers there must use Small Area FMRs. HUD added 41 metropolitan areas through a notice published October 25, 2023 (88 FR 73352). The FY 2027 notice also records two boundary changes carried over from FY 2026: Calvert County, Maryland left the Washington metro area, and several Connecticut towns moved in and out of the Hartford area, with agencies in all of them still required to use SAFMRs. HUD lists the designated areas on its Small Area FMR page and in the Small Area FMR Schedule. This page does not copy the list because it changes.

Voluntary use and the 110 percent exception

An agency outside a designated area, or in a nonmetropolitan county for which HUD publishes SAFMRs, may choose to use them after notifying HUD. An agency that does not can still use SAFMRs in one way. Under 24 CFR 982.503(d)(2) it may set an exception payment standard for an entire ZIP code that exceeds the metro basic range as long as it stays at or below 110 percent of that ZIP code's SAFMR. If the exception area crosses several ZIP codes, the ceiling is 110 percent of the lowest SAFMR among them. The checker above shows this ceiling when you choose the ordinary metro option and enter a ZIP code SAFMR.

How HUD calculates a SAFMR

The method in the FY 2027 notice is unchanged from FY 2026. HUD starts with standard-quality gross rents that the Census Bureau provides for ZIP Code Tabulation Areas, and where they are statistically reliable it computes a two-bedroom-equivalent 40th percentile gross rent. It takes the first reliable estimate in this order: two-bedroom rents, then one-bedroom, then three-bedroom, converting the latter two to a two-bedroom equivalent with the bedroom ratios of the parent metro or nonmetropolitan area. To steady the figures, HUD averages the latest three years of estimates. For FY 2027 that means the 2022, 2023 and 2024 data. HUD calculates a ZIP code figure directly only when the data are statistically reliable.

Limits on decreases

The 90 percent floor that protects metro FMRs also applies to SAFMRs, with a wrinkle. In areas where HUD requires Small Area FMRs, the FY 2027 SAFMR may be no lower than 90 percent of the FY 2026 SAFMR. For all other metropolitan areas it may be no lower than 90 percent of the greater of the FY 2026 metro-wide FMR or the applicable FY 2026 SAFMR. Under the second rule, a ZIP code in an ordinary metro area is measured against the higher of its own earlier figure or the metro figure.

Worked example (hypothetical numbers)

Take a metro area with a two-bedroom FMR of $1,500. Under the ordinary FMR, an agency could set a payment standard between $1,350 and $1,650 for every ZIP code. Now suppose the area is a designated Small Area FMR area, and ZIP code A has a SAFMR of $1,200 while ZIP code B has $2,100. In A, the basic range becomes $1,080 to $1,320; in B it becomes $1,890 to $2,310. A voucher family could afford a unit in B that the metro-wide standard would never reach, and a landlord in A is paid closer to the local market. The numbers are invented for the example. The checker above uses the same arithmetic.

Common mistakes

• Looking for a ZIP code FMR in the ordinary table. ZIP code figures live in the Small Area FMR data.
• Assuming every agency uses SAFMRs. Only designated areas and agencies that opted in do.
• Applying a SAFMR to a project-based voucher unit. The regulation lets an agency elect to do that, but it does not apply by default.
• Mixing years. The metro FMR and SAFMR for the same fiscal year are published together.
• Treating the FMR as the payment standard. The agency sets the standard within the allowed range.

Who this is for

Landlords who want to know why two ZIP codes in one metro area get different voucher payment ceilings, voucher holders choosing where to search, agency staff drafting payment standard schedules, and advocates tracking how the rule affects neighbourhood choice.

What this page does not cover

• It does not list the designated metropolitan areas or any ZIP code figures. Use HUD's Small Area FMR page and schedule.
• It does not know your agency's payment standard, success-rate data or approved exception areas.
• It does not cover public housing flat rents, which agencies may also calculate from SAFMRs.
• It is general information, not housing or legal advice.