Does Lender Count Unpermitted Bathrooms?


Illegal/unpermitted bedrooms are never an issue, as long as appraisers do not count them in the gross living area and give no value to them. Likewise, unpermitted bathrooms are usually treated similarly. It is the unpermitted kitchens that give us a problem, as most lenders do not allow them.

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Frequently Asked Questions

Will an appraiser report unpermitted work?

I have seen unpermitted additions obtain financing, but only if the appraiser is well qualified and writes a good report as to why. The appraiser will have to sell the reason to include it, and most of the time you will never get the full square footage value for the addition.

Can you get a loan with unpermitted work?

Your mortgage lender can call in the loan if they learn you knowingly bought a home with unpermitted work. Although that rarely occurs, the bank may decide carrying the loan isn't worth the risk if the type of work performed exposes it to potential liabilities.

What makes a house uninhabitable for a mortgage?

Property is uninhabitable if it is derelict, partly derelict, not weatherproof or not secure. Properties without a kitchen or a bathroom. A property without either of these basic essentials won't qualify for a mortgage. Some lenders won't give a mortgage on a property with no heating either.

Do appraisers look under sinks?

If you are an appraiser, look under the sink to know what is there. If you are a seller, be aware the appraiser might call for repairs if seeing something like the photo above. It might be worth curing the problem before the appraiser comes (I'm not saying you should hide the issue if you know you have a mold problem).

What happens if you sell your house with an unpermitted bedroom?

Those buyers who are willing to take the risk will likely want to pay less than what you think the house is worth. For example, if you have a two-bedroom house, but one of those bedrooms is unpermitted, the market value of your house will likely be that of a one-bedroom house. This reduction in price may be significant.

Can you buy a house with unpermitted construction?

Many buyers will not take the risk of buying a house with unpermitted construction. Buyers may also have difficulty with bank financing on such a house. Those buyers who are willing to take the risk will likely want to pay less than what you think the house is worth.

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