Grading refers to where the soil, or ground, meets your house. Basements, even walkout basements, are always considered below grade since at least one wall is below ground level. Your home’s first floor sits at ground level (except for a walk-out basement) and is considered “on grade.” Any floors above ground level are “above grade.” It is very important you know the grade level of the floor(s) you want to install. Engineered flooring is designed to work at any grade level, and traditional 3/4″ solid flooring is only for “on grade’ or “above grade.”