Need your opinion not ttc/baby related

J. • Baby Girl Due 10/2021 via FET
Hey Ladies, so I need your opinion on a situation. I'm going to try to shorten this as much as possible. As you know DH moved down here a few months before me. His closest closest cousin ended up "going down with him". I put the "" only because she is up maybe every other month she gave him $150/month to go into a 2br. He was paying the remaining rent which is $1,200 + all utilities & cable. As you know I wasn't supposed to come down until July 2016 or so but got this opportunity to interview for this great position that would get me down sooner so our family can be together. We moved to a new apartment closer for everyone. The apt DH had before I came down was over 2hr commute each way to work. Now it's 20mins each way. We are paying a few hundred more in rent but it's a cleaner apt, closer to work & stores, more amenities, etc. just makes for a happier life 
1) Our original plan was & always has been for DH & I to buy a house & let her live with us. Specifically looking for a house that has a separate bedroom with windows in another part of the house just for her. She wouldn't pay any rent. 
2) We chatted with her & told her there's a possibility I move down sooner. Asked if she was ok with it. Discussed that there are no 3bedrooms so her & the kids would have to share a room but it's just for a year or 2 until we get the house. I even cried because I felt bad & she said that it absolutely is not a problem, she's just happy we are helping her get away from her mom who's driving her nuts (She's almost 36 & lives at home). 
3) she came over the week of July 4th. She helped watch the kids on a few days but insisted on eating out every night but didn't pay (8 days X at least $120 for just for dinner) She didn't help clean, she took the bedroom every night & didn't even offer my kids the bed once, they slept on the sofa. We didn't say anything. No biggie. 
4) She calls DH 2 days ago & basically says that we didn't take her feelings into consideration when I decided to come down sooner. And said we need to figure something out. She said 1. Get a 3 bedroom further away which will push our rent from $1,800 to about $2,600-$3,000. 2. She'll get another apt but we have to help with her rent & bills. She decided to do her internship out her because she wanted to get away from her family & wanted to be with us. 
DH explained that we can't move further because I need to be in close proximity to the kids in case of emergency & we cannot afford an additional $1,000+ in rent & bills. He said we discussed beforehand & she was ok with the living situation because it's temporary. Then she just making little remarks basically saying that she can't share with the kids because they would drive her nuts. After several little comments about our family he finally said. We love her but she's not paying any rent or utilities in this apartment, nor would she be on the house we are spending over $500,000 to get a house big enough to accommodate her without asking for anything. 
They have never fought before. DH is feeling like she's a selfish, entitled brat & she's feeling like she wasn't considered even though we spoke to her. DH said that's my wife & kids if there's an opportunity for our family to be together sooner why wouldn't we take it?!
Who, if anyone is wrong or right here?