How do we say “no?”

Let me begin by saying that I am directing this question to folks who have been in a similar situation to see how it was handled. If you disagree with what I’m going to say, do not bother telling me that you disagree.

SD is 21 and will be graduating college. She is really close to BM. They call each other “best friends.” She and DH are not super close. Frankly, when she is at home, it feels like BM may as well be here. She tries to take on the role of the lady of the house (especially how she interacts with two younger siblings) and I feel like a guest in my own home. I anticipate that she will ask to live with us after graduation. BM lives a literal five minutes away. I think she will choose our house because there are step siblings at BMs (I do not have children). I do not want her to live with us full time for any length of time. If she wants to stick to the 50/50 schedule that her younger siblings are on, I could be okay with that for a few months, until she gets her own place. Has anyone had to tell their kid (or spouse had to tell your step kid) that they cannot live with you full time post-college? This may seem cruel but there is so much more to the story that is not relevant here. I just want any to know if anyone else bas been through this.

I have expressed this to DH and he understands and agrees that 100% of the time would be difficult. He is not sure how to handle it in a way that doesn’t alienate her completely.