Fannie Mae Form 1025, the Small Residential Income Property Appraisal Report, is the standard appraisal form used when a two-, three-, or four-unit residential property is financed with a mortgage sold to Fannie Mae or Freddie Mac (Freddie Mac calls the same form Form 72).1Fannie Mae. Appraisal Report Forms and Exhibits A licensed appraiser completes it, not the property owner or borrower. What you can control is what you hand the appraiser, how you prepare the property, and how carefully you read the finished report.
Which Properties the Form Covers
Form 1025 applies to traditional appraisals of two-, three-, and four-unit residential properties, including units in planned unit developments, condo projects, and co-op projects, where the appraiser performs both an interior and exterior inspection.1Fannie Mae. Appraisal Report Forms and Exhibits Duplexes, triplexes, and fourplexes all fall under it. At five units the property leaves Fannie Mae’s residential framework entirely and needs a commercial appraisal.
One narrow exception: a two-unit property can be appraised on the single-family Form 1004 instead if each unit is occupied by a co-borrower as a principal residence, or if the second unit’s value is relatively insignificant compared to the total property value, such as a below-grade apartment or a small unit over a garage.1Fannie Mae. Appraisal Report Forms and Exhibits Outside those scenarios, any two- to four-unit property going through Fannie Mae or Freddie Mac financing gets Form 1025.
What to Gather Before the Appraiser Arrives
You will not fill the form out yourself, but the appraiser needs information from you that directly shapes the final value. Getting these items together before the inspection prevents follow-up requests that stall your loan.
- A current rent roll listing every unit with the tenant name, monthly rent, lease start and end dates, and whether the unit is occupied or vacant.
- Copies of executed lease agreements so the appraiser can verify contract rent and lease terms. Month-to-month arrangements should be documented in writing too.
- Operating expense records: property taxes, insurance premiums, any utility costs you pay rather than the tenants, maintenance expenses, and management fees.
- Documentation of recent capital improvements, such as a new roof, updated kitchens, or replaced mechanical systems. These feed into the appraiser’s condition rating.
- Confirmed access to every unit on inspection day. Coordinate with tenants ahead of time. A locked unit means a return trip and a delayed report.
The blank form is available as a free PDF directly from Fannie Mae.1Fannie Mae. Appraisal Report Forms and Exhibits Appraisers complete it through specialized software that formats the data for electronic submission, but reading through the blank form before your appointment shows you exactly what will be documented and helps you anticipate what the appraiser will ask about.
What the Appraiser Does On Site
Form 1025 requires a complete interior and exterior inspection.1Fannie Mae. Appraisal Report Forms and Exhibits The appraiser walks every unit along with accessible common areas: basement, attic, hallways, mechanical rooms. They assess the condition of structural components, electrical and plumbing systems, heating and cooling, and anything that reads as a health or safety concern.
For each unit, the appraiser records the room count, gross living area, and layout. The form requires a per-unit breakdown of bedrooms, bathrooms, and other rooms, not a property-wide total. That detail drives both the comparable sales adjustments and the rental income analysis. If one unit in your triplex has been converted to three bedrooms while the others stayed at two, the distinction gets documented and factored in.
The appraiser also photographs the property, including front, rear, and street scene views of the subject, plus interior photos as needed to support the condition assessment.
How the Value Is Calculated
Form 1025 uses two valuation methods together. The sales comparison approach anchors the analysis, and the income approach is mandatory for all two- to four-unit properties.2Fannie Mae. Cost and Income Approach to Value Fannie Mae does not accept an appraisal that relies on the income approach alone; it has to be paired with sales comparison data. The appraiser reconciles the two into a single final value opinion, weighing each based on how reliable the available data is in that market.
Sales Comparison
The appraiser identifies at least three recently sold properties with similar unit count, size, condition, location, and amenities, and makes dollar adjustments for the differences.3Fannie Mae. Comparable Sales A comparable fourplex that sold with a newer roof might get a downward adjustment relative to your property; one in a weaker location might be adjusted upward.
Finding good comparables for multi-unit properties is harder than for single-family homes because there are fewer transactions. When nearby sales are scarce, the appraiser can expand the geographic search area, but must explain why and make location adjustments.3Fannie Mae. Comparable Sales Foreclosures and short sales can serve as comparables when they represent the best available data, provided the appraiser addresses their prevalence in the neighborhood and any stigma effect on value.
Income Approach and the Gross Rent Multiplier
Because these properties produce rental income, the income approach adds a second lens. Form 1025 uses the Gross Rent Multiplier, a ratio calculated by dividing a comparable property’s sale price by its gross rent. The appraiser identifies sold properties where both the sale price and rental income are known, calculates the GRM for each, and applies an appropriate multiplier to the subject property’s estimated market rent to produce a value indication. The report must include the supporting comparable rental and sales data along with the GRM calculations.2Fannie Mae. Cost and Income Approach to Value
The form’s rental income schedule compares your actual contract rent against prevailing market rent for similar units. If your rents are well below market, the appraiser uses market rent, not your below-market leases, for the GRM calculation. Above-market rents get adjusted down. GRM values vary widely by market and property class: in areas with lower prices relative to rents, multipliers often land in single digits, while high-appreciation markets push them into the teens. The GRM is a screening tool. Its job on Form 1025 is to provide an income-based check on the sales comparison value, not to override it.
After the Report Is Written
The completed report goes to the lender electronically through the Uniform Collateral Data Portal. UCDP submission is mandatory for Form 1025, and the appraisal must receive a “Successful” status before the lender can sell the loan to Fannie Mae. The portal runs automated checks on formatting, data consistency, and completeness, and flags errors for the appraiser to correct. If a revised version is created later, that final version used in underwriting must also be submitted and receive a “Successful” status.4Fannie Mae. Uniform Appraisal Dataset (UAD) and the Uniform Collateral Data Portal (UCDP) The lender also independently reviews the appraisal, checking that the income approach is consistent with comments elsewhere in the report and that the comparables support the value conclusion.2Fannie Mae. Cost and Income Approach to Value
Federal law requires the lender to give you a copy of the completed appraisal. Under Regulation B, which implements the Equal Credit Opportunity Act, the creditor must deliver it either promptly upon completion or three business days before the loan closes, whichever comes first.5Consumer Financial Protection Bureau. 12 CFR 1002.14 – Rules on Providing Appraisals and Other Valuations You can waive the timing requirement and agree to receive the copy at or before closing, but the lender cannot withhold it.
Read it carefully when it arrives. Check that the unit count, room counts, and square footage match what you know about the property, and that the contract rents listed are correct. Errors in these basic inputs flow through to the final value and cause underwriting problems.
What to Do If the Value Comes In Low
If the appraised value lands below what you expected, you can request a Reconsideration of Value through your lender. Fannie Mae allows one borrower-initiated ROV per appraisal report.6Fannie Mae. Reconsideration of Value (ROV) The lender provides the ROV request form and walks you through their process. If your submission is missing information, the lender has to work with you to fill in the gaps before sending the request to the appraiser.
An effective ROV points to specific factual support: comparable sales the appraiser may have missed, corrections to property details such as a wrong unit count or a missing renovation, or market data that contradicts the appraiser’s conclusions. General disagreement with the number accomplishes nothing. The goal is to show the appraiser overlooked something concrete.
Even when the borrower identifies a minor error that does not change the final value, the appraiser must update the report to correct it and document the change.6Fannie Mae. Reconsideration of Value (ROV) If the ROV uncovers material deficiencies, the lender must ensure those are corrected as well. The process must comply with Appraiser Independence Requirements, so the lender cannot pressure the appraiser toward a specific value. The appraiser evaluates the new information independently and decides whether it warrants a change. You can cancel an ROV request at any point.
Problems That Commonly Delay the Appraisal
Multi-unit appraisals hit snags more often than single-family ones, mostly because the income data adds complexity. The recurring issues are predictable enough to head off:
- Inaccessible units. If a tenant refuses entry or is not home on inspection day, the appraiser cannot complete the report. Schedule access in advance and confirm with every tenant.
- Missing or inconsistent lease documents. Verbal arrangements or cash rent with no records make income hard to verify. Written leases for every unit, including month-to-month agreements, strengthen the report.
- Deferred maintenance. Health and safety issues such as non-functional smoke detectors, exposed wiring, or water damage can trigger a requirement for repairs before the lender accepts the appraisal. Address obvious problems before the inspection.
- Scarce comparable data. In markets with few recent multi-unit sales, the appraiser may struggle to find three good comparables. If you know of recent sales they might have missed, mention them. The appraiser is not obligated to use your suggestions, but it gives them a starting point.
- Rents well below market. Long-term tenants on old leases drag the income picture down. The appraiser uses market rent for the GRM calculation, but a reviewing lender may question why actual income diverges so sharply from the appraised potential. Be ready to explain.
Appraisal fees for two- to four-unit properties run higher than single-family appraisals because of the additional units to inspect and the income analysis the form requires. Your lender orders the appraisal, and the fee appears on your loan estimate.