DGM had a hospital bed installed upstairs (there was no DGF to consider at that point) as it was a far nicer room and there is no way she would have accepted living downstairs.
The family organised it themselves and paid extra for delivery and installation upstairs. (They also had a stairlift installed at an earlier point - which became unused relatively quickly).
In her case, the only bathroom downstairs was down 2 large steps into the garage, to a toilet with wind rushing under the door.
Upstairs, there was a toilet, and a bathroom next to it with bath, separate shower, and sink, and all on the same level. And there was a sink in DGMs room when her mobility reduced further.
It depends what will work in the individual circumstances your family has - is there somewhere else for DM to sleep if a hospital bed is needed for DF? Is the person who will be doing caring duties able to run up and down stairs as needed (both during the day when they might spend a lot of time together, and during the night when in separate rooms)?
Are there ways to make the upstairs more "living" space - kettle, mini-fridge, handful of cups and plates, tv, comfortable chair(s) etc? Where both can sit and enjoy their time? And also leaving enough space for any extra equipment needed either now or into the future (hoist, commode, etc). (Things like kettle, fridge etc don't need to be in the same room as DF, but if there is somewhere they can be put out of the way but on the same floor so there is less need to be up and down stairs a lot during the day/night, especially of DM is of a similar age to reduce potential for slips and falls, that is what I am thinking about).
If you can show you have thought it through, that will definitely help your argument as to why it is not suitable for DF to be downstairs. It might mean not having guest bedrooms anymore, or making downstairs space into guest room and upstairs space into the living space on a "temporary" basis (not temporary as in a few weeks - for as long as it's needed for DF, but can be converted back to its current normal when no longer needed in the future).