Wibhay,
Emotional rollercoster of emotions is on the cards right now, but its better now, than 12 months down the line and a 100k mortgage to think about. Your still young and have plenty of opportunity to have a family with the right man. Have you always visioned having a child within a partnership? who said that you had to do it with someone, plenty of people go it alone now and are able to manage with supportive family.
You said earlier that you wanted to be nearer to parents, why don't you move closer to them? I can see you very happy in a two bed roomed house with your DC and a Labrador around the corner from your parents living the life of your dreams.
As for your relationship, it does sound very much like it's you moving in with him and his children, not you both buying your own house and having guests to stay. Imagine your DC being a girl and being housed in a bedroom which is decorated half and half with a 16 year old step sibling, it's something that really won't work.
My SIL is in a newish relationship, both her and her partner have 2 children each, 2 girls both 12 (within 6 weeks of each other) 2 boys, 1, 9 and 1, 3. Both my SIL and her DP have both said that they'd not consider the upheavel of both family's by moving in together, as both sets of kids would have to share rooms which is totally unreasonable, and that's with girls of exactly the same age and boys with smaller gap than your children would have with your partners 2.
I would seriously consider your options, i know that you love this man dearly, but is it what you want?