Here's what your lender is concerned about vis-a-vis unpermitted square footage. Caveat: this has nothing to do with what the city or your insurance company thinks about unpermitted square footage. That's another thing entirely. Your lender, through the property appraisal, will be concerned with:
- The addition must be done in a workman-like manner with decent construction standards. Nothing with cinderblock bricks instead of a foundation, for example.
- It can't have a kitchen. This is a big no-no for most municipalities, too.
- The addition's square footage will not be counted towards the square footage of the house. You can't say your house is 400 sf bigger because somebody drywalled the garage.
- There must be comparable or similar additions, permitted or not, in the neighborhood. For example, if the homes on your street were built with carports instead of garages, but subsequently everyone enclosed their carport, it's probably okay with your lender.