My BIL lives at home with his parents and they are an abject example of how not to do this.
You are right to have concerns and if you have misgivings now I would say no as you do not have the room.
I would think long and hard about all this before she moves in with you because this arrangement can go so very, very wrong and very quickly as well. It could well end up souring your relationship with her completely.
Do you actually have the room for this extra person?. If not it is okay to say no now. If you like your own space you will feel like you have been invaded by an interloper.
You ALL need to sit down long before she moves in to establish proper ground rules (do not do this just before or when she arrives!). Your DP must play his part here in this and cannot leave it all to you to sort out. You all need to establish who does what and what is expected from each other in terms of behaviour. Honest and frank communication between you all now is essential. If none of this can be achieved at this stage then she would actually be better off living elsewhere.
How does she get along with your children?.
Does she actually like children?. Would she help at all with the DC?.
What about her social life, could she be out till all hours?. How responsible a person is she?.
She absolutely cannot freeload off you, she needs to pay a set amount of rent on a monthly basis. This should take into account all utility usage, internet, food etc. Does she have specific food preferences; again such issues can cause problems. Does she hog the bathroom, how many bathrooms do you have?.
She also needs to NOW give you a firm leaving date: if she cannot or will not provide one this is further cause for concern and I would not take her in. I would not take her into your home at all if she cannot provide a leaving date.
As you can see there is an awful lot to think about here.