What Section 8 Owners and Asset Managers Need to Know

On February 3, 2026, HUD released the annual Operating Cost Adjustment Factors (OCAFs) to adjust rents for eligible Section 8 contracts.

These factors apply to properties with contract anniversaries on or after February 11, 2026.

What OCAFs Do

OCAFs are the inflation multipliers applied to the operating expense portion of contract rent (not debt service). They are used when renewing:

• Section 8 contracts under MAHRA, and
• Certain Project-Based Voucher contracts that permit OCAF adjustments

HUD has wide discretion in setting them, with one firm rule: they cannot produce a negative adjustment.

How HUD Builds the Numbers

OCAFs are not pulled from thin air. They are composite calculations built from changes in nine cost buckets:

• Electricity
• Employee benefits
• Employee wages
• Fuel oil
• Goods, supplies, equipment
• Insurance
• Natural gas
• Property taxes
• Water/sewer/trash

HUD uses audited financial statements to determine how heavily each category weighs in a given state, then multiplies those weights by price changes from federal data sources such as EIA, BLS, and the Census Bureau.

In plain terms:
Your state's expense profile × measured inflation = your factor.

The 2026 National Picture

The nationwide average is 5.1%.

But real estate is local, and OCAFs vary widely.

Higher adjustments this year

• Louisiana - 9.8%
• Florida - 8.2%
• Texas - 6.4%

Lower adjustments

• Maine - 3.3%
• New Hampshire - 3.6%
• Nevada - 3.8%

Mid-range examples many portfolios will use

• California - 4.9%
• Maryland - 4.8%
• Virginia - 4.9%
• Ohio - 4.9%

And, the Virgin Islands wins the trophy this year at 12.3%.

Important: HUD Is Asking for Feedback

HUD is inviting public comment on:

• Whether different data sources should be used
• Whether cost categories should change
• How regional variation can be better captured
• Whether forward-looking models should be considered

Comments are due by April 6, 2026.

HUD will not revise the 2026 factors based on those comments, but they will influence the 2027 factors.

So, complain now, maybe benefit later.

Practical Takeaways for Owners & Investors

1. Budget immediately

Asset management, lenders, and investors will expect updated revenue projections.

2. Confirm eligibility

Not every contract or rent method uses OCAF.

3. Separate operating costs from debt service

Only the operating portion gets adjusted.

4. Manage expectations

An OCAF increase rarely keeps pace with real-world spikes in payroll, insurance, or taxes.

5. Prepare your paperwork

Anniversary processing delays can cost real money.

Bigger Picture

OCAFs are meant to provide predictability and administrative efficiency, not to fully reimburse actual cost growth. Some years, they feel generous; other years, they feel like bringing a garden hose to a warehouse fire.

Either way, they are the rules of the road.

Smart operators plan around them rather than argue with them.