S.H.
Hello! I was in a very similar situation as you are now. I have a (now) 3 1/2 year old daughter and a one year old daughter. When my second daughter was born she stayed in the room with us, while my first was in her room, and we have one more bedroom that my friend was staying in several days a week while she commuted here from MD to finish grad school. So the baby was in our room in a pack and play until just recently (at a year old) when my friend finished school last month! It was kind of rough having her in there for so long. You couldn't go in at night and turn on the light to get dressed, or if she was taking a nap and you had to go in the room you had to be REALLY quiet, all that stuff. But I really never considered putting them in the same room. You don't want the youngest waking up in the middle of the night and waking the other one up. And if they are different sleeping schedules that would be really rough. And of course the safety issue, I don't think I would be able to sleep. So see how long you can stick it out with the baby in your room. You can always have some kind of white noise to help. We had an air purifier we used and it really seemed to help.
I am also a stay at home mom. I would love to chat with you sometime about homeschooling. We are planning to do the same! I would like to get involved in some kind of homeschool co-op. Where about are you located? ~ S.