Last updated 2026-07-25
TL;DR
To start a group home you generally need a business entity, a state license through your health or social services agency, a property that passes zoning and fire-marshal review, staff who meet training and background-check rules, and a policy manual covering care, medication, and emergencies. Costs and timelines vary heavily by state, so confirm specifics with your state licensing agency before you sign a lease.
What is a group home, exactly?
A group home is a licensed residential setting where a small number of people, usually somewhere between 4 and 16 depending on the state, live together and get support from paid staff. It's not a hospital. It's not a single-family home with a few extra tenants either. The "licensed" part is what makes it a group home instead of just a rental house. Group homes serve very different populations depending on the license type: people with intellectual or developmental disabilities (IDD), people in mental health recovery, people in substance use recovery, seniors who need help with daily activities, or youth in child welfare placements. Each population has its own regulatory chapter in most states, and the license you apply for depends entirely on who you plan to serve. A home licensed for adults with IDD generally can't just start accepting seniors who need memory care without an entirely separate license and inspection. The federal government doesn't license group homes directly. Licensing sits with state agencies (departments of health, social services, or disability services depending on the state), which is why the rules differ so much from one state to the next. If you want a sense of how one specific state structures this, our assisted living facility guide walks through a representative example.
What is assisted living?
Assisted living is a licensed residential option for people, usually older adults, who need help with daily activities like bathing, dressing, medication management, and meals but don't need the round-the-clock skilled nursing care of a nursing home. Assisted living residences are licensed at the state level, not the federal level, and the exact term varies. Some states call it "residential care facility." Others use "assisted living facility" or "personal care home." The Centers for Medicare & Medicaid Services (CMS) doesn't regulate assisted living as a category the way it regulates nursing homes, because assisted living isn't a Medicare or Medicaid "facility type" under federal law in the same sense. States set their own staffing ratios, admission and discharge criteria, and physical plant rules. That's the single biggest thing new operators get wrong: they assume there's a national standard. There isn't. Every requirement in this article needs a "confirm with your state licensing agency" asterisk next to it.
What is an assisted living facility (and how is it different from a nursing home)?
| Regulator | State licensing agency | State agency + federal CMS (42 CFR 483) | |
|---|---|---|---|
| Level of care | Help with daily activities, some medication assistance | 24-hour skilled nursing and medical care | |
| Typical staffing | Direct care aides, on-call nurse | RNs, LPNs, CNAs around the clock | |
| Medicare coverage | Not covered as room and board | Covers short-term skilled stays under Part A | |
| Medicaid coverage | Often through HCBS waivers, varies by state | Covered under state Medicaid plans | If you're deciding which license to pursue, read our comparison of assisted living facilities against other residential care models before you commit to a build-out. |
An assisted living facility is the physical, licensed building where assisted living services happen. It typically has private or semi-private rooms, common dining and activity space, and staff on-site to help with activities of daily living. A nursing home (also called a skilled nursing facility) is a higher level of care licensed to provide 24-hour skilled nursing, rehabilitation therapy, and medical treatment ordered by a physician. The practical difference for an operator: nursing homes fall under federal Medicare/Medicaid Conditions of Participation set out in 42 CFR Part 483, which mandate things like registered nurse coverage and specific survey processes [1]. Assisted living facilities are governed by state licensing rules only, which is why staffing ratios, medication assistance rules, and even the definition of "assisted living" itself vary state to state. | Feature | Assisted living facility | Nursing home |
What does assisted living provide day to day?
Assisted living typically provides help with what regulators call "activities of daily living": bathing, dressing, toileting, mobility, and eating. It also usually includes medication reminders or assistance (not full medication administration, which often requires a nurse depending on the state), three meals a day, housekeeping, laundry, and some level of social or recreational programming. What it generally does not provide, unless the state license specifically allows a higher tier, is skilled nursing care, IV therapy, or complex wound care. Some states have a two-tier or three-tier assisted living license (basic, enhanced/limited, and special care units for memory care), each with its own staffing and training requirements. Getting this tier wrong on your application is one of the more common reasons plans get delayed at the state level. It's usually not denied outright, just sent back for revision, which still costs you weeks.
Does Medicare cover assisted living?
No. Medicare does not pay for room and board in assisted living, and it does not cover custodial care (help with bathing, dressing, or supervision) on an ongoing basis. Medicare.gov states plainly that Medicare "doesn't cover long-term care (also called custodial care)" if that's the only kind of care needed [2]. Medicare Part A can cover short-term skilled nursing facility stays after a qualifying hospital stay, and Medicare will pay for medical services a resident receives (a doctor visit, physical therapy, durable medical equipment) even while they live in assisted living, but it will not pay the facility's monthly rate. Medicaid is a different story: many states cover assisted living-type services through Home and Community-Based Services (HCBS) waivers authorized under Section 1915(c) of the Social Security Act, though Medicaid still generally won't pay for room and board itself, only the care component [3]. If Medicaid reimbursement is part of your business model, read our funding and Medicaid resources before you finalize your pro forma. Waiver enrollment is its own multi-month process, separate from state licensing.
How do I start a group home? The 8-step overview
Here's the honest sequence, roughly in order, though several steps run in parallel in practice. 1. Pick your population and license type (IDD, mental health, senior residential care, recovery housing) because this decision drives everything downstream, from staffing ratios to the building code that applies. 2. Form a legal business entity (LLC or corporation) and get your federal EIN. 3. Research your state's specific licensing chapter and application packet through your state licensing agency, because fees, forms, and required attachments differ by state. 4. Secure a property that already meets, or can be renovated to meet, your state's zoning and fire/life-safety code for the resident count you plan to serve. 5. Write your policy and procedure manual: admission and discharge criteria, medication management, emergency and disaster plans, resident rights, grievance procedures, staffing plan, and abuse/neglect reporting. 6. Hire and train staff, complete background checks (most states require fingerprint-based checks through the state and FBI), and document training hours before residents move in. 7. Schedule and pass your pre-licensure inspection, covering fire marshal sign-off, health department review, and sometimes a separate building/zoning inspection. 8. Submit your final application with all attachments, pay the license fee, and wait for your license certificate before admitting a single resident. Depending on the state and how prepared you are, this whole sequence can take anywhere from about 3 months to over a year. Property renovation and zoning approval are usually the slowest steps, not the paperwork itself.
What legal and business setup do I need first?
Before you touch a licensing application, most states want to see a formed business entity. An LLC is the most common structure for small group home operators because it separates your personal assets from the business and it's relatively cheap to form (state filing fees typically run somewhere between $50 and $500 depending on the state, according to each secretary of state's fee schedule). You'll also need a federal Employer Identification Number (EIN) from the IRS, which is free and takes about 15 minutes online through irs.gov [4]. Some states require proof of business registration, a certificate of good standing, and sometimes a specific corporate purpose clause naming the type of care you'll provide, before they'll even release the licensing application packet. Check whether your state licensing agency requires the entity to be formed before you apply, or whether you can apply first and form the entity in parallel; both models exist.
What zoning and property requirements apply to group homes?
Zoning is where a lot of first-time operators get stuck, and it's often the single biggest schedule risk in the whole process. Most residential zones allow "family" use, and many states have laws requiring that a licensed group home of a certain size (commonly 6 or fewer residents) be treated as a permitted residential use, not a special exception, specifically to prevent discriminatory zoning against people with disabilities under the Fair Housing Act. The Fair Housing Act, at 42 U.S.C. § 3604, makes it unlawful to discriminate in housing based on disability. Joint guidance from HUD and the Department of Justice explains that local zoning and land use laws must accommodate group homes for people with disabilities rather than treating them as a prohibited use, and that "reasonable accommodation" requirements under the Act can require a municipality to waive or modify a zoning rule that would otherwise exclude a group home [5]. That guidance is the primary source most zoning attorneys cite when a municipality tries to single out a group home application for extra hearings. That said, larger homes, or homes serving populations outside the disability-protected categories, may face additional zoning review, conditional use permits, or public hearings depending on your municipality. Beyond zoning, expect a fire marshal review (sprinkler requirements often kick in above a certain resident count), an ADA-adjacent accessibility check, kitchen and bathroom minimums per resident, and sometimes a separate building code review if you're converting a single-family home into a licensed facility. Get the fire marshal and building department involved before you sign a lease or purchase agreement, not after. For a property-specific walkthrough, see assisted living at home, which covers converting a residential property into a licensed setting.
What staffing and background check requirements should I expect?
Nearly every state requires criminal background checks for anyone who will have direct contact with residents, typically run through the state's central registry plus an FBI fingerprint check for a national criminal history record. Many states also check a state abuse and neglect registry separately from the criminal background check. Staffing ratios vary by license type and by state, but common patterns include a minimum number of awake staff overnight (especially for higher-acuity populations), a required staff-to-resident ratio during waking hours, and a designated administrator or manager who often needs a specific credential (a state-approved administrator training course, sometimes 40 to 100 hours, depending on the state). Direct care staff typically need CPR/first aid certification, and many states require dementia-specific training if you're licensed for memory care. Build your staffing plan around your actual resident acuity, not the state minimum. Homes that staff to the legal floor tend to struggle during survey and during actual emergencies.
What does a group home policy and procedure manual need to cover?
Your policy manual is the document surveyors will ask for first, and it needs to match what actually happens in the home, more than what sounds good on paper. At minimum, most states expect written policies covering: admission and discharge criteria, resident rights and grievance procedures, medication storage and administration, incident and emergency reporting (including mandatory abuse/neglect reporting timelines), fire and disaster evacuation plans, infection control, staff training and supervision, and resident recordkeeping. Some states provide a template or checklist as part of the application packet; others expect you to write it from scratch against their regulatory chapter. This is the step where a lot of new operators either pay a consultant several thousand dollars or spend weeks reverse-engineering someone else's manual. If you want a shortcut that still leaves you owning and understanding every policy, GroupHomePath's $299 State Group Home Licensing Kit builds out state-specific policy templates, staffing plan worksheets, and the application checklist together, so you're not starting from a blank page. Start at /licensing-kit-builder to see what's included for your state.
What happens during the licensing inspection?
Before you get a license, expect at least one pre-licensure inspection, and often two or three separate ones from different agencies: the health or social services licensing surveyor, the local fire marshal, and sometimes a building or zoning inspector. The surveyor is checking your physical plant against the written code (bedroom square footage per resident, bathroom counts, kitchen sanitation, accessible egress) and your paperwork against your policies (staff files, background check documentation, training records, resident files if you already have any). After you're licensed, most states require ongoing inspections, commonly annual, sometimes more frequent for higher-acuity licenses, plus unannounced visits triggered by complaints. Our inspections hub covers what surveyors flag most often and how to prep a mock survey before the real one.
How much does it cost to start a group home?
Costs vary enormously by state, property type, and population served, so treat any single number with suspicion. Rough categories to budget for: entity formation ($50 to $500), state license application fees (commonly $100 to a few thousand dollars depending on the state and license type, confirm with your state licensing agency), property costs (purchase, lease, or renovation, which is almost always the largest line item), fire suppression system upgrades if required, staff training and background check fees, liability insurance, and either DIY or consultant costs for your policy manual. Nobody publishes a single reliable national average because state fee schedules and building requirements differ so much. The honest answer is to pull your specific state's fee schedule from its licensing agency website and build your budget from that document, not from a blog post average.
How long does it take to get a group home license?
Realistically, plan for 3 to 12+ months from the day you start researching to the day you can legally admit your first resident. The fastest path is a property that already meets code (a former group home or assisted living building) paired with a complete, accurate application packet submitted on the first try. The slowest path involves zoning variances, fire suppression retrofits, or an incomplete application that gets kicked back for corrections, each of which can add months. States are required to process applications, but very few publish a guaranteed turnaround time, and none can lawfully promise approval. Anyone who guarantees you a license or a specific approval date isn't being straight with you. The state makes that call after reviewing your specific application and inspection results, not before.
Frequently asked questions
What is assisted living?
Assisted living is a licensed residential setting for people, typically older adults, who need help with daily activities like bathing, dressing, and medication management but don't need full-time skilled nursing care. States license and regulate assisted living individually; there's no single federal definition or standard.
What is a group home?
A group home is a licensed residential home where a small number of residents, often 4 to 16 depending on the state, live together with paid staff support. Group homes serve specific populations (IDD, mental health, recovery, or senior care) under a license type tied to that population.
What is an assisted living facility?
An assisted living facility is the licensed physical building where assisted living services are delivered, typically including private or semi-private rooms, common areas, and on-site staff. It's regulated at the state level, not by CMS, so specific requirements vary by state licensing agency.
What is the difference between assisted living and a nursing home?
Assisted living helps residents with daily activities but doesn't provide 24-hour skilled nursing care; nursing homes do, and they're regulated federally under 42 CFR Part 483 alongside state licensing. Nursing homes accept short-term Medicare-covered skilled stays; assisted living generally does not qualify for Medicare coverage at all.
What does assisted living provide?
Assisted living typically provides help with bathing, dressing, mobility, and medication reminders, plus meals, housekeeping, laundry, and social activities. It generally does not include skilled nursing, IV therapy, or complex medical treatment unless the facility holds a higher-tier state license for enhanced or special care.
Does Medicare cover assisted living facilities?
No. Medicare.gov states Medicare doesn't cover long-term custodial care, which includes assisted living room and board. Medicare may still pay for covered medical services (doctor visits, therapy) a resident receives while living there, and it covers short-term skilled nursing facility stays separately, but not assisted living itself.
How do I start a group home?
Pick your population and license type, form a business entity, secure a property that meets zoning and fire code, write your policy manual, hire and background-check staff, pass your pre-licensure inspection, and submit your complete application to your state licensing agency. Expect the full process to take several months to over a year.
What license do I need to start a group home?
The license depends entirely on who you plan to serve: IDD group home, mental health residential facility, substance use recovery residence, or senior residential care/assisted living. Each has its own regulatory chapter, application, and inspection standards through your state licensing agency, so confirm the exact license category before you write your business plan.
Can I convert my house into a group home?
Often yes, if the property meets zoning, fire/life-safety, and building code requirements for your resident count and license type, but it depends heavily on local zoning and your state's specific occupancy rules. Get your local fire marshal and building department involved before signing anything, since retrofit costs can be substantial.
How many residents can a group home have?
It depends on the state and license type; many states treat homes with 6 or fewer residents as a standard residential use under fair housing protections, while larger homes may face additional zoning review. Confirm your state's specific resident cap for your license category with your state licensing agency.
Do group home staff need background checks?
Yes, essentially every state requires criminal background checks, usually including fingerprint-based FBI checks, for anyone with direct resident contact, plus checks against state abuse/neglect registries. Requirements and lookback periods vary by state, so confirm your state's specific background check statute with your licensing agency.
How much does it cost to start a group home?
Costs vary widely based on property, state fees, and population served; expect entity formation fees ($50-$500), state license fees, property acquisition or renovation (usually the largest cost), staff training, and insurance. There's no reliable single national average, so build your budget from your specific state's published fee schedule.
What's the difference between a group home and assisted living?
Group home usually describes a smaller residential setting for IDD, mental health, or recovery populations, while assisted living usually describes senior-focused residential care with help for daily activities. The terms overlap in some states' regulations, so the actual license category and regulatory chapter matter more than the label.
Sources
- eCFR, 42 CFR Part 483: Nursing homes are regulated under federal Conditions of Participation including nursing staff requirements
- Medicare.gov, Long-term care coverage: Medicare doesn't cover long-term custodial care such as assisted living room and board
- 42 U.S.C. § 1396n, Section 1915(c) Home and Community-Based Services waivers: States can cover assisted living-type services through HCBS waivers under Section 1915(c)
- IRS, Apply for an Employer Identification Number (EIN) Online: EINs can be obtained free of charge directly from the IRS
- HUD, Office of Fair Housing and Equal Opportunity, Reasonable Accommodations Under the Fair Housing Act (joint statement with DOJ): Municipalities may be required to grant reasonable accommodations from zoning rules for group homes serving people with disabilities
- 42 U.S.C. § 3604, Fair Housing Act discriminatory housing practices: The Fair Housing Act makes it unlawful to discriminate in housing based on disability, the basis for limits on discriminatory zoning against group homes