Can my wife and I pray side by side at home?

It depends on whether you are praying together or separately. If you pray as a group, with the husband leading, the wife stands behind him. If each of you is praying on your own, standing near each other is fine. Standing level in a group prayer is not the Sunnah, and some scholars are stricter about it.
Praying together: she stands behind
When two or more people pray together, one leads and the others follow. Anas described a time when the Prophet ﷺ led him and an orphan boy in a prayer at home: the two of them stood in a row behind him, and the old woman of the house stood behind them (Sahih al-Bukhari 380). Most scholars take from this that a woman stands behind the men, even when she is the only woman and her husband is the only man. See Where do women stand in the prayer rows?
This is not about status. It simply keeps the prayer focused and spares anyone from having someone directly beside or behind them while they bow and prostrate.
Praying separately, side by side
The rule about standing behind applies when you are praying in congregation. If each of you is praying your own prayer, most scholars see no problem in standing near each other, and a little space between you is better. Having a wife nearby does not harm a husband's prayer. Aisha reported that she used to sleep in front of the Prophet ﷺ while he prayed (Sahih al-Bukhari 382).
What if she stands level with me in a group prayer?
Most scholars say the prayer is valid, but it is not the Sunnah, so they ask you to correct it next time. The Hanafi school is stricter and says it can affect the prayer, so to avoid any doubt just place your wife behind you. If you are unsure about a past prayer, ask a trusted local imam.
Setting it up in a small home
- Husband's mat in front, wife's mat behind. A small offset to the side is fine if the room is narrow.
- Children: boys stand behind the father, and girls stand with their mother.
- Coverage: both of you cover what the prayer requires, as for any prayer.
- Pick a regular time, such as Maghrib or Isha, so it becomes a family habit.
Praying together at home counts as a congregation. See Can I pray in congregation at home with my family? It is also a lovely habit in Ramadan. See Can I pray taraweeh at home?
- In a group prayer, the husband leads and the wife stands behind him.
- If each prays alone, standing near each other is fine.
- Standing level in a group prayer is against the Sunnah; Hanafis are stricter.
- Praying together at home earns the reward of congregation.
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