House hacking with potential family roommate

[Steven Donohoe]

I recently bought a house with a 3.5 down fha. It's a 3 bed 2 bath. Master bedroom has its own bathroom. Other 2 rooms share a bathroom. I'm taking the master bedroom. The other two rooms are the following sizes. A 12x11, and a 11x8. I'm pretty certain I can get $550-600 a month plus utilities for the larger room and $400-450 for the smaller room plus utilities. 

My youngest brother age 23 wants to rent a room from me but can only afford $400 per month he says plus utilities. He wants the larger room and thinks he should get that room because he's family. I'm running a fine line of trying to decide what's best for me to house hack and also not look like the *** hole family member. What do you think I should do. I guess the plus to all this is its one roommate I know I can trust. My mortgage is $950 and I'd like to at least have my mortgage paid by my roommates so I can save for a down payment on a rentalproperty.