The Hidden Rule That Just Cost a Couple $8,000 (Floor Area Ratio Exposed)

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Bill Reid:

Well, hello everyone. Bill Reid here with The Awakened Homeowner, coming to you with Episode 33 in our Understanding Design Limitations series. Today we're tackling one of those things that I promise you—you don't know what you don't know. And trust me, floor area ratio falls squarely into that category for most homeowners. This is one of those restrictions that lurks in the municipal code, waiting to surprise unsuspecting homeowners who thought they understood what they could build.

In last episode, Episode 32, we explored planning departments and city regulations. We talked about how those departments function, what they care about, and how to navigate their requirements. But today we're going to be drilling down into the single most important calculation that determines how big your home can actually be. And spoiler alert: it's not as simple as "I can build whatever fits."

The floor area calculation—FAR, as it's known in the world of design, city planning, building departments, architects, and designers—is a global master rule that is one of the first things that you will want to discover in your city or county.

Now, not all cities and counties have this rule, but I would say more often than not they exist. And you might even find that some jurisdictions require a minimum size home, which is interesting. And that's so that in planned unit developments, we don't get somebody building a little guest house and then never building their main house.

Whether you're buying land to build your dream home, planning an addition to your existing house, or dreaming about adding that second story, this episode might be the most valuable 35 minutes you spend before you even talk to an architect, or maybe even before you purchase a property. Smart homeowners will look at some of these rules and regulations that we've been talking about and that we're going to be talking about before they actually purchase a property, especially if they have intentions to do a major remodel, renovation, or of course build a new home.

Understanding floor area ratio before you commit to property or designs can literally save you tens of thousands of dollars in redesign costs or help you avoid buying the wrong property entirely. So let's get into it. What is floor area ratio? Why should you care? And most importantly, how do you navigate it successfully?

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So let me start with a simple question. If you own a piece of property, should you be able to build whatever you want on it? Your gut may say yes—it's my land. And I get that. You bought it, you own it. You should have the freedom to build your vision, right?

But cities have a different perspective that ultimately you better know before you shell out some dough. They're thinking about the neighborhood character, the infrastructure capacity, even the sunlight and the shadows, traffic patterns, parking availability, and overall livability. They're looking at the bigger picture—how individual decisions affect an entire community.

So floor area ratio, FAR, is the primary tool they use to balance your property rights with community planning goals. Understanding the FAR isn't just about compliance and checking boxes. It's about setting realistic expectations before you fall in love with a design you can't actually build. It's about avoiding that heartbreaking moment when you discover you need to cut 800 square feet from your plans, or worse, realizing you purchased land that can't support your vision.

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So what exactly is floor area ratio? At its core, floor area ratio is beautifully simple. It's your total living space divided by your lot, expressed as a percentage. That's it.

Building area divided by lot area equals FAR.

Let me give you a concrete example from my book. Let's say your home with a proposed addition is 2,300 square feet, and your lot is 6,000 square feet. If you divide 2,300 by 6,000, you get 0.38, or 38%. That's your floor area ratio: 38%.

Now cities establish maximum FAR allowed for each zoning district. So they might say that in your particular designation—maybe it's called R-16, and you may remember that from the previous episode—usually in a lot of cities, R-6 or R-16 means lots up to 6,000 square feet, meaning residential single-family lots up to 6,000 square feet, and they allow 45% FAR.

So in our example, you're at 38% and the maximum is 45%. Sounds like you have plenty of room to grow, right? You've got a 7% buffer. That should give you some flexibility for changes and additions. Hold that thought, because we're about to discover why that comfortable 38% can very quickly become 47%—over the maximum—without you adding a single additional room to your plans. That's the nature of FAR calculations. They're deceptively simple on the surface, but the details will surprise you.

A higher FAR indicates usually a denser development—more building on less land. A lower FAR means more open space relative to the building footprint. Cities in urban areas often allow higher FARs, maybe 50, 60, even 100% in some cases, especially in commercial districts. But rural or suburban areas with larger lots typically have lower FAR limits, maybe 30 to 40%, to preserve that open, spacious character.

Many of the cities that I've worked in in the Bay Area, California—such as the City of San Jose, California, which is a very large city smack dab in the capital of Silicon Valley—their FAR is 45%. And then as you go into the more affluent communities, as we get towards the hillsides and everything, you'll find that some of the FAR is 30 to 35%. So it's going to range from city to city, from county to county if there is no incorporated area where you're building.

The formula itself is straightforward: building area divided by lot area. But here's where it gets tricky. And this is what catches homeowners and, frankly, designers off guard.

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Before we dive into the calculation surprises—and trust me, they're coming—let's understand why this restriction exists. Because once you understand the why, the how makes a lot of sense, and you'll stop resenting these rules quite so much.

Cities use floor area ratio primarily to control the mass and the scale of the buildings in residential neighborhoods. They're trying to prevent what I call the "pink palace plopped in a classic neighborhood" syndrome. Have you ever seen that when you've been walking around your neighborhood or visiting other friends' neighborhoods, where someone's built a massive house that just feels wrong? Like it's looming over all the neighborhoods? Or every other house is a modest 1,800 square feet, and suddenly there's this 4,500-square-foot behemoth that blocks views, casts shadows, and just overwhelms the street. That's exactly what FAR is designed to prevent.

Now, what's happening in a lot of suburban communities, especially ones built in the post-war era—'40s, '50s, '60s—a lot of homes on 6,000-square-foot lots, for example in the City of San Jose, were modest 1,200 to 1,500 to 1,800-square-foot homes. And that's what I grew up in.

And then in the City of San Jose, as I mentioned earlier, their FAR is 45%. So guess what's happening? We have a little 1,200 to 1,800-square-foot home, and then right next to it, we have a two-story 4,000-square-foot home, or whatever 45% of that is. And in the City of San Jose, they don't count the garage. You can imagine a tiny little house next to this big, huge house of 45% of just living area, not including the garage, and we're going to get into those details today.

But that's why sometimes you see some of these homes and you ask yourself, "Why? How did this happen?" Well, that's one of the reasons why it happens. Although FAR is designed to protect neighborhood character, sometimes the legacy rules that have been in place, and then as neighborhoods evolve and go through a renaissance, this is what happens. Now, I suppose eventually all of the homes will be that large, but it'll probably be 50 years before it happens. So you've got this mismatch going on throughout the neighborhood.

The other thing it does—the FAR—is preserve property values by ensuring consistency and proportions, which is to your benefit. So once you get over the fact that somebody else is telling you how big your home can be, there's definitely some benefits, so that when your neighbor tears their house down, you're not going to end up with a pink palace next to you.

It manages infrastructure capacity because a neighborhood designed for 2,000-square-foot homes has certain water, sewer, and traffic capacity built in. If you suddenly allow 5,000-square-foot homes, you're exceeding the infrastructure design parameters. The city—and that neighborhood I was talking about—they've already replaced, I think, the sewer lines a couple times in my lifetime there, and that's because they're getting more and more load coming onto the systems.

So FAR also preserves light and solar access in neighborhoods. Large buildings can block sunlight to neighboring properties, affecting everything from gardens to solar panels to just the general feeling of space. So some cities include sun angle requirements in their zoning codes and incorporate that into their FAR calculations.

It ensures fair and equitable development. Without FAR limits, wealthier property owners could dominate a neighborhood with dramatically oversized homes, fundamentally changing the character that attracted everyone there in the first place. FAR creates a level playing field where everyone plays by the same size rules, regardless of their budget.

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Now let's get into those surprising calculation details I've been hinting at. This is where the seemingly simple formula becomes complex, and this is where homeowners get caught. Remember our example? You had 38% FAR with a maximum of 45%, giving you that comfortable 7% buffer.

But here's what most people don't realize: the floor area that counts toward FAR isn't always what you think it is. Different cities have wildly different definitions of what constitutes floor area. Let's break down the common surprises.

Garages: In some cities, garages count fully toward FAR. In others, they're excluded entirely. In still others, attached garages count but detached garages don't, or the first 400 square feet is exempt but anything beyond that counts. The City of San Jose, for example, excludes garages entirely from FAR calculations, which is why you see those enormous homes I mentioned earlier.

Covered porches and patios: These might be exempt if they're open on three sides, or they might count at 50%, or they might be fully included if they have solid railings instead of open ones. The devil is in the details, and these details vary significantly.

Basements: Some cities exclude basements entirely from FAR calculations. Others count them fully. Still others count them partially or only count them if they're above a certain percentage of grade. If your property slopes, this becomes even more complicated.

High ceilings and mezzanines: This is a big one. Some cities count any room with ceilings over a certain height—say 12 feet—as multiple stories, even if there's no second floor. A great room with 20-foot ceilings might count as 1.5 or even 2 stories worth of floor area.

Attics: Is it storage space or livable area? If you can stand up in it, does it count? If it has a window, does that change things? Cities define this differently.

Stairways and hallways: Usually counted, but sometimes with exemptions or modifications.

Mechanical rooms, utility rooms, storage: The rules vary wildly.

Now, let's go back to our original example. You had 2,300 square feet divided by 6,000 square feet, giving you 38% FAR with a maximum of 45%. But let's add in the real-world details that most homeowners don't consider until it's too late.

Your 2,300 square feet includes a 400-square-foot attached garage. You assumed garages don't count—you read that somewhere online about some city. But your city counts attached garages fully. So now you're really at 2,300 square feet toward FAR, not 1,900. That's still 38%, so you're okay so far.

But you've also got a beautiful 200-square-foot covered front porch that you love. You thought it wouldn't count because it's open. But your city counts covered areas at 50% if they're under a roofline, even if open. So add 100 square feet.

Now you're at 2,400 square feet. That's 40% FAR. Your buffer just shrank from 7% to 5%.

You've also got a great room with 18-foot ceilings. You didn't realize your city counts any room over 15 feet as 1.5 stories. Your great room is 400 square feet. So instead of counting as 400 square feet, it counts as 600 square feet.

Now you're at 2,600 square feet. That's 43% FAR. Your comfortable buffer just became 2%.

And here's the kicker: you're planning to finish that attic space for a home office. It's 300 square feet of space you weren't counting because you thought of it as "attic." But once you put in windows and proper flooring, it becomes habitable space, and it counts.

Now you're at 2,900 square feet on a 6,000-square-foot lot. That's 48% FAR. You just went from thinking you had a 7% buffer to being 3% over the maximum. And you haven't even broken ground yet.

This scenario plays out more often than you might think. And this is why understanding FAR early, and getting the specific rules for your jurisdiction in writing, is absolutely critical.

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But wait, there's more. We've been assuming your lot size is straightforward at 6,000 square feet. But let me tell you, lot size calculations can be just as tricky as floor area calculations.

The lot area used in FAR calculations isn't always your full property. Many jurisdictions subtract certain areas from your lot size before calculating FAR. This makes your allowable building area smaller than you might expect.

Here are the common adjustments:

Steep slopes: If portions of your property are too steep to build on—say, over 30% grade—that area might be excluded from the lot size calculation. So if you have a 10,000-square-foot lot but 3,000 square feet of it is steep hillside, you might only have 7,000 square feet of net buildable area for FAR purposes.

Easements: This is a big one, and we're going to do a whole episode on easements because they're so important. But for now, know that utility easements, access easements, drainage easements, and conservation easements often reduce your net lot area for FAR calculations. That 20-foot-wide utility easement running along your property line might eliminate 800 square feet from your buildable calculation.

Setbacks: In some jurisdictions, required setbacks are excluded from the net site area calculation. This seems counterintuitive—you own the setback area—but some cities don't count it toward your developable lot size.

Wetlands or protected areas: Any protected natural features are typically excluded.

Right-of-way dedications: If your city requires you to dedicate a portion of your property for street widening or sidewalks, that comes out of your net lot area.

Let's revisit our example one more time with these lot size adjustments. You thought you had a 6,000-square-foot lot. But there's a 10-foot-wide utility easement along one side. That's 600 square feet you can't count. You also have a 15-foot front setback that your city excludes from net area calculations. That's another 450 square feet.

Now your net lot area for FAR purposes isn't 6,000 square feet—it's 4,950 square feet.

Remember, you calculated 2,900 square feet of building area. You thought that was 48% of 6,000 square feet, which was over the limit. But now it's actually 59% of your net lot area. You're way over the maximum.

This is the nightmare scenario that I've seen play out too many times. Homeowners or even inexperienced designers don't discover these calculation details until the plans are submitted for permits, and then it's time for a costly redesign.

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Let me share a real-world example from my experience. I had a client in the Bay Area, lovely couple, empty nesters downsizing from a large home to build their dream retirement house. They fell in love with a 7,500-square-foot lot in a beautiful neighborhood. The zoning allowed 45% FAR, so they calculated 3,375 square feet of potential building area.

They hired an architect without consulting me first at that stage, developed beautiful plans for a 3,200-square-foot home. They were thrilled. Under budget on size, great design, everything was perfect. They submitted for permits.

Then came the surprise. The lot had a significant drainage easement—15 feet wide running through the middle of the property—that reduced the net lot area by 1,200 square feet. The net lot area was actually only 6,300 square feet.

But it got worse. Their city counted garages, and they had an attached 500-square-foot garage. The city also counted covered patios at full area if enclosed by railings on two or more sides, and they had a 240-square-foot covered patio that they thought was exempt.

Their actual floor area was 3,940 square feet, not the 3,200 they thought. And their net lot area was 6,300 square feet, not 7,500. Their FAR wasn't 43% like they calculated—it was 63%. They were massively over the allowed 45%.

The redesign cost them $8,000 in additional architectural fees, delayed their project by three months, and they had to eliminate features they loved—the covered patio, part of the master suite, and some storage areas.

All of this could have been avoided with proper due diligence before they purchased the property and before they developed plans. A simple consultation with the planning department, getting the specific FAR rules in writing, and having a preliminary survey done would have revealed these issues upfront.

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So how do you avoid these surprises? How do you navigate FAR successfully? Here's your action plan.

Step 1: Research before you buy. If you're purchasing property with the intention to build or remodel, research the FAR limitations before you close escrow. Contact the planning department. Ask specifically about the allowable FAR for the zoning district. Request written documentation of what counts toward floor area and what's excluded. Ask how easements and slope affect net lot area calculations.

If possible, have a preliminary meeting with a planner. Bring in site photos and a survey if you have one. Many planning departments offer free preliminary consultations, and this 30-minute meeting could save you from buying the wrong property.

Step 2: Get a professional survey early. Don't rely on the property dimensions from the real estate listing or the assessor's parcel map. Get an actual survey done by a licensed surveyor. Have them clearly identify all easements, setback requirements, slope restrictions, and any other encumbrances that affect net lot area.

This survey should be done before you develop detailed plans, ideally before you even hire an architect. A survey costs $1,000 to $3,000 typically, but it will save you multiples of that in avoided redesign costs.

The surveyor should specifically identify on the survey the net buildable area after all exclusions. They should work with your planning department's requirements to ensure the survey addresses all the factors that affect your FAR calculation.

Step 3: Get specific FAR rules in writing. Here's a critical insight from 35 years in the business: never assume FAR calculations are the same from city to city, even within the same county. And never—I repeat, never—rely on verbal interpretations without written documentation.

FAR definitions and what's included in the calculations vary significantly between jurisdictions. What counts towards FAR in one city may not count in the neighboring city. Rules change, interpretations evolve. You need documentation.

When you're researching your property's FAR, document the specific rules for your city or county. Don't rely on general knowledge or assumptions. Get specifics. Contact your planning department and ask for written confirmation of the FAR percentage allowed in your zoning district, what elements are included in floor area calculations—do garages count? Covered porches? High ceilings?—how easements affect the net site area, whether any slope adjustments apply, and any other unique aspects of how your city calculates FAR.

Step 4: Design with FAR in mind from day one. Once you understand your FAR limitations and have them documented, communicate them clearly to your entire design team, or hopefully the architects are already communicating to you what the FAR is.

This isn't something to figure out halfway through the schematic design process, design step one that I've spoken about. The FAR needs to be a fundamental parameter from the very first sketch.

Doing the math upfront will help you make strategic trade-offs early in the design process. This is where you ask: Do I want the garage more than I want those extra bedrooms? Do I want high ceilings more than I want that covered patio? Do I want attached garage convenience more than I want maximum house size? It's going to be very personalized to your own needs and the property.

It's good to build in a buffer, too. Don't design to the exact maximum allowed. If your FAR limits 2,700 square feet, design to 2,650 or something, just so that you have a little bit of a buffer when the planning department says, "No, you didn't measure it exactly right, and you have to go all the way to this side of the wall or something." And as you've seen in the past, it can really add up. So leave room for some minor adjustments and ensure you're safely under the limit. The last thing you want to be fighting is 50 square feet during the permit review process.

And here's one: ask your architect to verify the FAR compliance at each design checkpoint. When you finish schematic design, check FAR. When you complete design development, design step two, check FAR, and then verify it again.

Make it part of your regular quality assurance processes. I'm saying this because during the design process, things change from schematic to design development. Rooms grow. "I want to move, I want to bump this out two feet. I want the front porch a little bit deeper." These are the things that happen during the design process, so a lot of times people don't circle back and go, "Wait, are we exceeding the FAR?"

So that is something that you want to be really careful with as you're getting excited about your design and not realizing that you've exceeded the FAR and nobody really told you.

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So let's wrap this up. Here's your FAR navigation plan summarized: Research your property's specific FAR rules. Involve your architects or surveyors. Get everything in writing so there's no ambiguity. Design with FAR as a fundamental parameter from day one. This is an overriding rule, and then we're going to be just digging deeper and deeper. They're all related to each other, but the FAR will govern just about everything that's going to be underneath these rules.

If you want to dive deeper into floor area ratio and all the other design limitations that we're covering in this series, grab a copy of The Awakened Homeowner book. This particular limitation is in section 2.306, where it breaks down FAR in even more detail. Plus, you'll get a complete roadmap for navigating zoning ordinances, setbacks, height restrictions, lot coverage, impervious surface, and all the other rules that are going to affect your project.

The book is designed to be your reference guide throughout the entire planning and design process. Every question we're addressing in this podcast series is covered in depth in the book, with even more examples, calculations, and real-world scenarios. And of course, you can find it on Amazon, and you can see it in the show notes—there will be a link there.

I'd love to hear from you. Have you run into FAR surprises on your project? Did your city have unusual calculation methods that caught you off guard that maybe I didn't even talk about? What do you wish you'd known earlier? Drop a comment on YouTube or send me a DM on Instagram.

And if this episode helped you understand floor area ratio, if it clarified something that was confusing or prevented you from making a costly mistake, share it with someone who's planning a project. Send it to your friend who's looking at land to buy. Forward it to your family member who's planning an addition. This information could literally save them from expensive surprises.

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Next time on The Awakened Homeowner, I'm going to get into more of these design limitations, and I haven't decided which one to cover, but I might talk about easements next.

I just want to thank you for spending the time with me today. I know your time is valuable, and I really appreciate that you're taking these steps forward to protect your experience.

One thing about the mission of The Awakened Homeowner is you are going to be a prepared homeowner, a prepared client for the design pro that you're going to be interfacing with. And they love it. If they know that a future client or a potential client is prepared and knowledgeable, it makes their job a lot easier. And if you go in prepared, you'll find a very expeditious and effective design process.

We covered a lot of technical ground, but I hope you see why it matters. You're not just building a house. You're orchestrating your dream home, and it may be you do this once in a lifetime. And that orchestration starts with knowing what's possible, understanding the constraints, and planning strategically from the very beginning.

So that's what The Awakened Homeowner is all about: enlighten you with knowledge, empower you to make informed decisions, and protect you from costly mistakes.

I'm Bill Reid, your home building coach. Let's make it happen.