Fair Market Rent

Fair market rent is the estimated amount a typical renter would pay for a modest, decent apartment in a specific area, as calculated each year by the U.S. Department of Housing and Urban Development (HUD).

HUD uses survey data and local housing costs to set these figures for hundreds of metro areas and counties across the country. Renters most commonly encounter fair market rent when applying for housing assistance programs, since the government uses these numbers to decide how much of a voucher or subsidy to provide. The figures are updated annually and generally reflect the cost of renting a unit at roughly the 40th percentile of local rents, meaning 40 percent of available rentals in the area cost the same or less.

For example, if HUD sets the fair market rent for a two-bedroom apartment in a mid-sized city at around $1,400 per month, a renter using a housing voucher would typically have their assistance calculated based on that figure. If the renter chooses an apartment that costs $1,600 per month, they may need to cover the $200 difference out of pocket.

Actual market rents in your neighborhood may be higher or lower than the HUD figure, so fair market rent is best understood as a regional benchmark rather than a guarantee of what you will pay. Figures may vary by state, county, and even zip code.

This number matters because it directly affects how much rental assistance a household can receive, and it can help renters gauge whether the rent on a unit they are considering is in a reasonable range for their local market.