Does an unpermitted addition count as square footage?
Published August 27, 2026
For measuring, yes. For value and lending, it is a problem. ANSI Z765 has no permit rule: a finished, above-grade, connected addition is measured and included in gross living area. But Fannie Mae and FHA require the appraiser to report unpermitted work, and the lender may require permits, give the area reduced or zero value, or decline the loan.
Will an appraiser report unpermitted work?
Yes, if it is apparent. Appraisers compare the house to public records and the sketch; an extra 300 sq ft that the assessor does not know about gets a comment. They are not code inspectors, but they are required to describe the property accurately and to note anything that affects marketability or safety.
How it affects the appraisal
- Conventional (Fannie Mae): the appraiser can include the area if it is well built and typical for the market, must disclose the permit status, and may adjust value down. The lender decides whether to accept it.
- FHA: HUD 4000.1 lets the appraiser include unpermitted space that is of quality workmanship, but may require it to be permitted or corrected.
- Any loan: if the work is unsafe or clearly substandard, it is excluded and may have to be fixed before closing.