How to Start a Group Home in Texas: Licensing, Zoning, and Standards

To start a group home in Texas, you need a state license from the Health and Human Services Commission (HHSC), and the license you apply for depends on whom you plan to serve. Adults who need help with daily activities are served by an Assisted Living Facility (ALF); children in 24-hour care are served by a General Residential Operation (GRO). Either path requires a registered business entity, cleared background checks on everyone connected to the operation, a facility that meets state minimum standards, proof of liability insurance, and a passing on-site inspection before you can accept your first resident.

Pick the Right License Track First

Texas does not issue a generic group home license. The license category is set by who lives in the home and what services you provide, and choosing the wrong track means the wrong forms, the wrong standards, and often starting over.

An Assisted Living Facility serves adults who need help with bathing, dressing, medication management, and similar daily activities. ALFs come in three subtypes. Type A is the most basic personal care, Type B covers residents with greater needs, and Type C is limited to residents who need only minimal assistance. Each subtype has its own staffing and physical plant rules.
A General Residential Operation serves children in 24-hour care and covers a broad range of operations from emergency shelters to residential treatment centers. HHSC regulates GROs under Texas Human Resources Code Chapter 42.

A third program, Home and Community-based Services, serves people with intellectual disabilities in small group homes under a Medicaid waiver rather than the ALF track. If that describes your plan, you contract with HHSC through the HCS program instead of applying for an ALF license, and applications are accepted year-round.¹ The rest of this guide focuses on the ALF and GRO paths.

Form a Business Entity Before You Apply

Before touching a licensing application, register a legal business entity with the Texas Secretary of State. Most operators choose a limited liability company or corporation because both shield personal assets from claims against the business. A sole proprietorship is possible but leaves your personal finances exposed if a resident or family sues.

You will also need a federal Employer Identification Number from the IRS. A single-member LLC is treated as a disregarded entity for income tax, so profits pass through to your personal return, unless you file Form 8832 to elect corporate treatment. Multi-member LLCs default to partnership treatment.² Employment tax obligations are separate from income tax classification, so plan for payroll from day one.

Whatever name and address you register must match your license application exactly. HHSC will reject applications over mismatched names or addresses.

Background Checks on Everyone Connected to the Home

Every person with a meaningful connection to your operation must clear a background check before the facility opens. The requirement covers the owner, the administrator, every employee, every volunteer with unsupervised access to residents, and every person age 14 or older who lives on the premises.³

Owners, administrators, and direct-care staff must submit fingerprint-based criminal history checks. Volunteers who are regularly present need at least a name-based Texas criminal history check, and a fingerprint check is required if the person has lived outside Texas at any point during the previous five years.³

Not every conviction is an automatic bar. Texas uses a tiered system. Some offenses permanently bar a person from being present at a licensed operation, others create a temporary bar, and others allow the person to request a risk evaluation. Felony convictions not specifically listed on the state’s charts trigger a bar if the conviction occurred within the past ten years, with a risk evaluation available to potentially overcome it.⁴ Anyone currently on parole for a felony must have an approved risk evaluation before setting foot in the facility. Run these checks early. A disqualifying result for a key person can undo months of planning.

Administrator Credentials and Required Training

The person you designate as administrator or manager must meet the education and experience requirements HHSC sets for the license type. For an ALF, the state generally expects formal education combined with hands-on management experience in healthcare or residential care. Verify credentials early, because HHSC reviews them during the application and will hold up your license if the record doesn’t line up.

Texas also mandates specific training on Alzheimer’s disease and related disorders. Every direct-care staff member at an ALF must complete at least four hours covering person-centered care, daily life activities, and common behavioral challenges. Managers complete the same four hours plus additional training on administrative support, staffing collaboration, and coordination of services. Both groups then complete two hours of continuing education on these topics every year.⁵ Staff must be trained before they provide unsupervised care, so budget the hours in your pre-opening timeline.

Liability Insurance Before You File

HHSC will not issue a permit without proof of liability insurance.⁶ You need general liability coverage for injuries on your property and professional liability coverage for claims related to the care you provide. Industry norms for small group homes point toward at least $1,000,000 per occurrence, though your insurer may recommend higher limits depending on the population you serve and the number of beds. Annual premiums for a small facility typically run from several hundred dollars to over a thousand, but rates vary widely based on location, claims history, and the level of care offered. Have the binder in hand before you submit the application.

File the Correct Application

Texas uses different forms depending on facility type, and using the wrong form is one of the most common early mistakes.

Assisted Living Facilities

For an ALF, file Form 3720, Application for State License to Operate a Long-term Care Facility. It covers initial licenses, change-of-ownership applications, and facility relocations. Two variants exist: Form 3720-G for Type A or Type B facilities applying under the “Application in Good Standing” track, and Form 3736 specifically for Type C facilities.⁷ Applications are completed through the TULIP (Texas Unified Licensure Information Portal) online system.⁸

General Residential Operations

For a GRO, the correct form is Form 2960, Application for a License to Operate a Residential Child Care Facility.⁶ GRO applications require substantially more supporting documentation than ALF applications. You must submit a business plan with location details and governing body members, a fiscal plan showing at least three months of operating reserves and a twelve-month budget, a floor plan sketch with room dimensions and sleeping arrangements, and an emergency evacuation and relocation plan.⁹

GRO applicants also submit an extensive set of written policies covering record-keeping, personnel, admissions, discipline, emergency behavior intervention, abuse and neglect reporting, suicide prevention, weapons, and volunteer management.⁹ These are not boilerplate documents. The state reads them carefully, and generic policies that don’t reflect your specific operation come back for rework.

Licensing Fees

For an ALF, the initial license fee is $300 plus $15 per bed, capped at $2,250 for a three-year license. A two-year license runs $200 plus $10 per bed, capped at $1,500.¹⁰ A six-bed ALF pays $390 for a three-year license; a 100-bed facility hits the $2,250 cap. The same fee schedule applies to renewals and change-of-ownership applications.

GRO licensing fees follow a separate schedule that varies by the specific type of residential child-care operation. Payment is handled through the online portal or by mailing a check with your application.

Facility Standards Your Building Must Meet

Your building must comply with the Life Safety Code, local building codes, and HHSC minimum standards. The local fire marshal must inspect the property and issue a certificate of compliance covering smoke alarms, fire suppression systems, and emergency exits. That certificate is a prerequisite for an occupancy permit from your local building department.¹¹

Bedroom Size

Minimum bedroom sizes depend on your facility type and whether the building is new construction or an existing structure. In a new small Type A ALF, each single-occupancy bedroom must provide at least 80 square feet of usable floor space, and shared bedrooms must provide at least 60 square feet per resident.¹² Existing Type B facilities face higher minimums: 100 square feet for single rooms and 80 square feet per person for shared rooms.¹³ Portions of a bedroom less than eight feet wide in the smallest dimension cannot count toward these measurements, so oddly shaped rooms may fall short even if the total square footage looks adequate on paper.

Bathrooms

For new large Type B ALFs, the state requires at least one toilet and one sink for every six residents, plus one bathtub or shower for every ten residents.¹⁴ Smaller and existing facilities have their own plumbing fixture requirements that vary by subtype. Check the standards for your exact classification before signing a lease or purchasing a property. Retrofitting bathrooms is one of the most expensive surprises in this process.

Zoning: What Cities Can and Cannot Do

Zoning is where many group home plans stall. Before you commit to a location, verify with the local planning department that the property allows a residential care business.

Texas Chapter 123 Protections

Chapter 123 of the Texas Human Resources Code protects community homes serving people with disabilities. A qualifying community home is treated as a single-family residential use for zoning purposes, so local governments cannot subject it to special zoning restrictions that don’t apply equally to other single-family homes.¹⁵ This prevents cities from using zoning ordinances to push group homes into commercial or industrial districts.

Federal Fair Housing Act

The federal Fair Housing Act prohibits local governments from using zoning laws to discriminate against group homes for people with disabilities. Under 42 U.S.C. § 3604(f), it is illegal to refuse reasonable accommodations in rules or policies when those accommodations are necessary to give disabled residents equal opportunity to use and enjoy a dwelling.¹⁶ In practice, a local zoning board cannot block your group home based on neighbors’ objections, require spacing distances between group homes that don’t apply to other residences, impose extra procedural steps on your application, or enforce building codes more aggressively against your home than against comparable dwellings.

If a municipality denies your application or imposes discriminatory conditions, you can request a reasonable accommodation. Document the request, the city’s response, and the timeline. Zoning disputes involving disability discrimination are among the most frequently litigated Fair Housing Act claims.

Application Review and On-Site Inspection

Once your complete application package and fee reach HHSC, the state performs a completeness review to confirm every required field and attachment is present. This takes several weeks. Monitor your TULIP account for notices about missing documents or clarification requests, and respond quickly.

After the administrative review clears, HHSC assigns an inspector for an on-site visit. The inspector walks the entire facility looking for safety hazards, verifies fire safety compliance, confirms that bedroom and bathroom dimensions match what you claimed in your application, reviews food storage practices, and examines emergency exit routes. They also review staff personnel files, including completed background checks, and resident intake documentation to confirm you have operational systems in place.

A successful inspection produces an initial license, and you may begin accepting residents. HHSC conducts follow-up inspections to verify ongoing compliance, and your license must be renewed on its expiration cycle. Violations found during any inspection can result in corrective action plans, fines, or license revocation.

After You Open

GRO Staffing Ratios

If you operate a GRO, staffing ratios are heavily scrutinized during inspections. During waking hours, a single caregiver can supervise up to eight children if none require treatment services, or up to five children if at least one child in the group needs treatment. Children younger than five count as two children for ratio purposes.¹⁷ Cottage-style homes may be briefly out of ratio during waking hours to allow a normal home-like routine, as long as additional staff are on the premises and available for emergencies. That exception must be spelled out in your written staffing plan; inspectors will ask for it.

Federal Wage Rules and Employment Verification

Group home operators are employers, and federal wage laws apply from day one. Under the Fair Labor Standards Act, employees working shifts shorter than 24 hours must be paid for all hours on duty, including any time they sleep. For staff who reside on the premises or work extended shifts, employers may be able to exclude up to eight hours of sleep time from compensable hours, but only if the employee can usually get an uninterrupted night’s sleep and the employer provides adequate sleeping facilities.¹⁸ Miscalculated sleep time is one of the fastest routes to a Department of Labor investigation, and back-pay exposure grows quickly with overnight staff.

Every new hire must complete Form I-9 to verify employment eligibility. The employee fills out Section 1 no later than their first day of work, and you complete Section 2, including physically examining identity and authorization documents, within three business days after that.¹⁹ You cannot dictate which specific documents an employee presents, and treating employees differently based on citizenship or national origin during this process is illegal.

Medicaid Enrollment

If you plan to accept Medicaid-funded residents, and most group homes serving low-income or disabled populations do, you face a separate enrollment process on top of your state license. Residential care providers must be licensed as an assisted living facility and hold a contract with HHSC to participate in the state’s Residential Care program.²⁰

On the federal side, you need a National Provider Identifier through the National Plan and Provider Enumeration System before you can bill for services. Enrollment then runs through the Provider Enrollment, Chain, and Ownership System (PECOS) and the Medicare Administrative Contractor for your region.²¹ Once enrolled, you must report ownership changes and adverse legal actions within 30 days, and all other changes within 90 days, or risk losing your billing privileges.

Resident Privacy

Whether HIPAA applies to your group home depends on how you handle health information. The federal privacy rule covers any healthcare provider that transmits health information electronically in connection with standard HIPAA transactions, such as billing a health plan.²² A small group home that bills Medicaid electronically almost certainly qualifies as a covered entity and must comply with the HIPAA Privacy Rule, including limiting disclosures of resident health information to the minimum necessary for each purpose.²³ Even if your facility falls outside HIPAA’s technical scope, Texas state law imposes its own confidentiality obligations on licensed care providers. Treat resident medical records, medication logs, and care plans as confidential from day one. Store physical records in locked cabinets, restrict electronic access to authorized staff, and train every employee on what they can and cannot share.

1
Texas Health and Human Services. How to Become an HCS Provider
2
Internal Revenue Service. Limited Liability Company (LLC)
3
Texas Health and Human Services. Background Check Rules – 26 TAC Chapter 745 Subchapter F
4
Cornell Law Institute. 26 Texas Administrative Code 745.661 – What Types of Criminal Convictions May Affect a Subject’s Ability to Be Present at an Operation
5
State of Texas. Texas Health and Safety Code 247.0291
6
Texas Health and Human Services. Become a 24-hour Residential Provider
7
Texas Health and Human Services. How to Become an ALF Provider
8
Texas Health and Human Services. Texas Unified Licensure Information Portal
9
Texas Health and Human Services. Minimum Standards for General Residential Operations – 26 TAC Chapter 748
10
Cornell Law Institute. 26 Texas Administrative Code 553.47 – License Fees
11
Texas Health and Human Services. Long-Term Care Regulation Technical Memorandum TM 2023-02 – Life Safety Code Inspection, Testing, and Maintenance
12
Cornell Law Institute. 26 Texas Administrative Code 553.212 – Space Planning and Utilization Requirements for a New Small Type A Assisted Living Facility
13
Cornell Law Institute. 26 Texas Administrative Code 553.122 – Space Planning and Utilization Requirements for an Existing Small Type B Assisted Living Facility
14
Justia Law. Texas Administrative Code 553.247 – Mechanical Requirements for a New Large Type B Assisted Living Facility
15
Justia Law. Texas Human Resources Code Title 8 Chapter 123 – Community Homes for Persons with Disabilities
16
Office of the Law Revision Counsel. 42 USC 3604 – Discrimination in the Sale or Rental of Housing and Other Prohibited Practices
17
Cornell Law Institute. 26 Texas Administrative Code 748.1003 – For Purposes of the Child/Caregiver Ratio, How Many Children Can a Single Caregiver Care For
18
U.S. Department of Labor. Fact Sheet 33 – Residential Care Facilities (Group Homes) Under the Fair Labor Standards Act
19
U.S. Citizenship and Immigration Services. Employment Eligibility Verification (Form I-9)
20
Texas Health and Human Services. Residential Care
21
Centers for Medicare & Medicaid Services. Become a Medicare Provider or Supplier
22
U.S. Department of Health and Human Services. Covered Entities and Business Associates
23
U.S. Department of Health and Human Services. Summary of the HIPAA Privacy Rule