Fannie Mae Form 1025, known to Freddie Mac as Form 72, is the standardized appraisal report used to value a two-, three-, or four-unit residential property when the owner applies for a conventional mortgage or refinance. A licensed appraiser completes it after inspecting the interior and exterior, and the lender uploads the finished report through the Uniform Collateral Data Portal (UCDP) before the loan can be sold to Fannie Mae or Freddie Mac.1Fannie Mae. Uniform Appraisal Dataset (UAD) and the Uniform Collateral Data Portal (UCDP) Borrowers do not fill it out themselves; their job is to give the appraiser the financial records and access needed to complete it accurately, which is where most avoidable delays start.
Which Properties the Form Covers
Form 1025 is used for traditional appraisals of two-, three-, and four-unit residential properties, including units in planned unit developments, condominiums, and co-op projects.2Fannie Mae. Appraisal Report Forms and Exhibits A single-family home with an accessory dwelling unit does not automatically trigger the form; that only happens when local zoning and the property’s physical layout classify the building as a true multi-unit. Once a property reaches five or more units, it moves into Fannie Mae’s multifamily lending program, which uses a different underwriting platform and a different appraisal framework entirely.
Getting this wrong at the outset is expensive. If the appraiser completes the wrong form, the lender cannot deliver the loan, and the appraisal has to be redone. Before ordering the appraisal, the lender should verify the unit count from public records and the property’s legal description.
What to Have Ready Before the Appraiser Arrives
The appraiser handles the inspection, but you control almost every document that feeds the numbers in the report. Pulling these together before the visit is the single most useful thing you can do to keep the file moving.
- Current lease agreements for every unit, so the appraiser can compare actual rents against market rents. Note any unit that is owner-occupied or vacant.
- Utility metering information. Whether gas, electric, and water are separately metered or shared affects the expense analysis, because shared meters push costs onto the owner and reduce net operating income.
- Two years of operating statements. The Operating Income Statement (Form 216) asks for actual year-end income and expenses for the prior two years; new properties supply projections instead.3Fannie Mae. Operating Income Statement – Form 216
- Recent property tax bills and any income-tax records that reflect rental income.
- Receipts and permits for recent renovations, which help justify above-market rents when the finishes support them.
The Operating Income Statement That Goes With It
Form 216 travels alongside Form 1025 and is completed jointly by the loan applicant, the appraiser, and the lender’s underwriter. As the applicant, you fill in each unit’s rental status, lease expiration date, current rent, market rent, and who pays the utilities. Rents must be reported on an unfurnished basis.3Fannie Mae. Operating Income Statement – Form 216
The line that trips owners up is replacement reserves. Form 216 requires a reserve calculation whether or not you actually set money aside for replacements, and whether or not your local market treats reserves as customary. The reserve covers any building component with a remaining life of more than one year, such as appliances, furnaces, roofing, and carpeting, spread across each item’s expected lifespan to produce an average annual figure.3Fannie Mae. Operating Income Statement – Form 216 Skipping this or lowballing it invites an underwriter correction that can pull the appraised value down.
Once you and the appraiser have completed your portions, the underwriter reviews every projection and adjusts any income or expense item that looks unreasonable for the local market.
How the Appraiser Values the Property
Form 1025 requires two valuation approaches: the sales comparison approach and the income approach. On two-to-four-unit properties the income approach is not optional the way it is for single-family appraisals. The cost approach is not required unless the property is a manufactured home.4Fannie Mae. Cost and Income Approach to Value
Sales Comparison
The appraiser selects at least three closed comparable sales and adjusts each for differences in location, condition, unit mix, and features. Comparables should have closed within the past 12 months, though older sales can be used if they are the best indicators of value, particularly in rural markets. When an older comparable is used, the appraiser has to explain why.5Fannie Mae. Comparable Sales
Fannie Mae does not set hard dollar caps on adjustments. Each adjustment must reflect how the market actually reacts to a given difference rather than a rule of thumb. When total adjustments get large enough to suggest the property doesn’t conform to its neighborhood, the underwriter has to decide whether the appraiser’s value opinion is still adequately supported.6Fannie Mae. Adjustments to Comparable Sales
Income Approach
The income approach values the property on its revenue potential. The appraiser calculates a Gross Rent Multiplier by dividing the sale price of each rental comparable by its monthly gross rental income, then applies the resulting multiplier to the subject property’s total market rent. The report has to show the supporting rental and sales data and the calculations used to arrive at the multiplier.7Fannie Mae. Cost and Income Approach to Value
In the final reconciliation, the appraiser weighs the two approaches and explains which one best reflects how buyers in that market actually make purchasing decisions. In neighborhoods dominated by owner-occupants, sales comparison usually carries more weight. In investor-heavy areas where buyers focus on cash flow, the income approach may drive the final value.
What Happens After the Appraiser Finishes
The completed report is packaged as an electronic data file that complies with the Uniform Appraisal Dataset (UAD) specifications, which standardize field definitions and responses across appraisal forms.8Fannie Mae. Uniform Appraisal Dataset (UAD) Frequently Asked Questions The lender then uploads the file to the UCDP, which is the shared clearinghouse for Fannie Mae and Freddie Mac. Form 1025 must be submitted through the UCDP and receive a “Successful” status before the loan can be sold. Any later revisions used for the underwriting decision have to be resubmitted and clear the same status check.1Fannie Mae. Uniform Appraisal Dataset (UAD) and the Uniform Collateral Data Portal (UCDP)
Once the portal clears the file, Fannie Mae’s Collateral Underwriter application assigns a risk score and flags anything worth a second look.9Fannie Mae. Collateral Underwriter The lender still performs a manual review to confirm the appraisal meets internal policies and federal lending rules, which typically takes three to seven business days depending on the property’s complexity. When that clears, the lender sends you a valuation notification, and the appraised value feeds into the loan-to-value calculation that sets your final loan amount.
Challenging a Low Value
If you think the appraised value is too low, you can request a Reconsideration of Value (ROV). Fannie Mae allows one borrower-initiated ROV per appraisal, and the lender must give you a disclosure explaining the process when it delivers the appraisal report.10Fannie Mae. Reconsideration of Value (ROV)11Fannie Mae. Appraisal Quality Matters
The submission needs specifics, not a general objection. At a minimum, include:
- Your name and the property address.
- The appraisal’s effective date and the appraiser’s name.
- A description of what you believe is unsupported or inaccurate in the report.
- Up to five additional comparable properties with their data sources, such as MLS listing numbers.
- An explanation of why the new data supports a different value.
These requirements come directly from the Fannie Mae Selling Guide.11Fannie Mae. Appraisal Quality Matters
The lender assigns an underwriter or appraisal subject-matter expert to review the request before forwarding it to the appraiser. If your submission is incomplete, the lender must work with you to fill in the gaps rather than reject it outright. When an ROV surfaces a minor error that doesn’t move the final value, the appraiser is still expected to correct the report and note the change.10Fannie Mae. Reconsideration of Value (ROV)
Two limits are worth knowing before you file. The lender makes the final call on whether to accept the appraiser’s conclusions, and an ROV does not entitle you to a new appraisal if the value doesn’t change. The whole process also has to comply with Appraiser Independence Requirements, which means neither you nor the lender may pressure the appraiser toward a specific number.11Fannie Mae. Appraisal Quality Matters