The first church began in a home on the Day of Pentecost (Acts 2). Other early churches also met in homes. For example, Aquila and Prisca held church meetings in their home (1 Corinthians 16:19). A church also met in the home of Philemon (Philemon 1:2). Multiple house churches in Rome are mentioned in Romans 16.
A home church certainly can be biblical. It is important to keep in mind that the term "church" in the New Testament was used in reference to the gathering of believers rather than the building in which they met. A church gathering can meet in a home, an outdoor location, a church building, a cathedral, a school, a gymnasium, or any other structure suitable to corporate gatherings aimed at worshipping God.
The first church in Jerusalem actually consisted of both home gatherings and larger outdoor worship times. Acts 5:42 notes, "And every day, in the temple and from house to house, they did not cease teaching and preaching that the Christ is Jesus."
What did the first church practice? Acts 2:42-47 provides a description of the early church that included a focus on the apostles' teaching, fellowship, breaking of bread, and prayer (v. 42). In addition, people shared their resources to meet needs, God worked in mighty ways, and people joined the Christian movement on an ongoing basis.
Three concerns are often mentioned regarding modern house churches. First, home churches are often non-traditional and do not "feel" like church to those accustomed to meeting in church buildings. This is a cultural issue and not a biblical concern. Some people will feel like they can worship better in a cathedral while others prefer a home. The issue here is not biblical, but cultural.
Second, home churches are sometimes started in opposition to what is seen as the institutional church. This motive could be seen as questionable. Churches are not intended to work as one congregation against another, but rather serve as parts of the same Christian family.
Third, home churches tend to lack the accountability of a larger church or church that is connected with a network or denomination of churches. In home churches, theological corruption or sinful moral practices can more easily become part of the lives of church members when there is no outside network of believers to help with theological beliefs or moral purity.
While home churches can serve as a biblical church, especially in remote locations or where there are few Christians, there are both other locations in which church gatherings can take place as well as concerns to address for those who choose to participate in a house church. Ultimately, the location is less important than the functions of the church, ultimately serving to worship God and to make disciples.
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