Below-Grade vs. Above-Grade Square Footage, Explained

Above-grade square footage is finished area on levels that sit entirely above the ground around the house. Below-grade square footage is area on any level that is partly or completely below the ground. Under ANSI Z765, the standard used for appraisals that follow Fannie Mae's rules, only above-grade finished area counts as gross living area (GLA); a finished basement is reported separately, however nicely it's finished.

This guide explains what grade means, the rule for levels that are only partly below ground, how walkout basements and split-levels are treated, and how to present both numbers so a listing or report doesn't overstate the home.

What "Grade" Means

Grade is the level of the ground around the house. A floor is above grade when the ground outside is at or below that floor all the way around. If earth rises above the floor on any side, part of that level sits below grade.

That's why the same basement can look so different from inside. A daylight basement with full-size windows on one side still has earth against its other walls, and a lower level built into a slope can have a walkout door at the back and soil to the ceiling at the front.

The ANSI Z765 Rule: Any Part Below Grade

ANSI Z765-2021 treats a level as below grade if any part of it is below grade. There's no percentage test: a level that is mostly above ground but has earth against one wall is still below grade, and its finished area is reported separately from GLA.

Since April 1, 2022, Fannie Mae has required appraisers to use ANSI Z765 when measuring gross living area on appraisals with interior and exterior inspections, so the rule shows up in appraisals even where older local habits counted walkouts or garden levels as living area. Appraisal forms carry a separate line for below-grade area and finished rooms below grade.

The other Z765 rules still apply to below-grade space: finished area needs a ceiling of at least 7 ft over at least half of it, any part under 5 ft doesn't count as finished, and unfinished areas such as a furnace room or storage are listed as unfinished, not finished.

Walkouts, Garden Levels and Split-Levels

Walkout basements: a walkout has a door at ground level on one side, but earth against the other walls, so under ANSI Z765 it's below grade and its finished area is not GLA. Its daylight, views and direct access still add value; they're reflected in how the space is valued, not in GLA.

Garden or English basements, with the floor a few feet below the ground and windows near the top of the walls, are below grade for the same reason.

Split-levels are judged level by level. Each level that's entirely above ground counts toward GLA; a lower level that is partly below ground is below grade, even when it's only a half-flight down. Measure and classify each level on its own rather than treating the house as one floor.

Local MLS rules for listings can differ from the appraisal standard, so check yours before quoting a figure, and say how it was measured.

Why the Difference Matters

Buyers, lenders and appraisers usually value below-grade space differently from above-grade living area, square foot for square foot. A listing that folds a finished basement into the main square footage can overstate the home by hundreds of square feet, and the gap surfaces at the appraisal, when it's most expensive to fix.

Showing the two figures side by side avoids that and still gets credit for the finished basement: "1,850 sq ft above grade plus 900 sq ft finished below grade" is clearer, and harder to dispute, than a single 2,750 that the appraisal won't match.

How to Report Both Numbers

List above-grade finished area (GLA) first, then below-grade finished area, then below-grade unfinished area, then the garage and other unfinished space. Give each level its own subtotal so a reader can see where every square foot sits, and add a room list for anything someone might question.

Measure every level, including unfinished parts of the basement, even if they won't appear in the headline figure; they still matter to buyers and to the appraiser. Our guide to calculating the square footage of a house walks through the room-by-room method, and the free square footage calculator keeps the categories apart for you.

How vPlan AR Handles Below-Grade Levels

In vPlan AR, each floor is a level of the project, and a level added below the main floor (a Basement level, for example) sits below grade. Rooms on a below-grade level are classified as below-grade finished by default, so they stay out of GLA unless you decide otherwise. Mark unfinished rooms as unfinished, and the garage and covered areas as such.

On Pro and Business, the square footage report totals GLA, below-grade finished, garage, unfinished and covered areas, with the plan and a room-by-room breakdown (see a sample). Because a scan measures room interiors, it's an interior, ANSI Z765-style breakdown, not the exterior measurement an appraiser takes. Our ANSI Z765 GLA report guide covers the rest of the standard, and the appraisers page shows how appraisers use the sketch.