Abstract This paper is the first attempt to empirically test the relationship between homeownership and business start-up by putting emphasis on the characteristics of both homeowners and firms. It relies on the fact that the firm size is relevant when considering the relationship between homeownership (outright or with mortgage) and new enterprises (small-sized or medium- and large-sized). A cross-section analysis of Italy supports our hypothesis that firm size matters in estimating the actual effect of homeownership on business start-up: Homeownership has a negative effect on large-sized business start-up; in contrast, outright homeownership has a positive effect on small business start-up, whereas homeownership with mortgage payments has a negative effect only on small business start-up. Theoretical explanations are also provided. JEL Classifications: C31, L25, L26, M13, R21, R31 firm size, business start-up, homeownership