And no, it won't be happening in a maternity ward!
According to the source, Megs and Harry's bub will be born at their new home, Frogmore Cottage.
"Obviously Meg's into all the homeopathy, so none of us was shocked when we found out she'd been talking about a water birthday," the source told Daily Star.
"Apparently, she wants it to be as natural as possible: no drugs, no caesareans and so on," the source explained.
"It’s the next logical step from all her yoga, meditation and so on."
The Palace insider added that naturally, the Meghan and Harry's birth plan could change. "Obviously when she goes into labour she might end up, medically speaking, having to go the more conventional route.
WATCH: FANS GO WILD FOR DAD-TO-BE, HARRY!
"But for now a water birth is absolutely her plan, is what they’re saying."
At 37, the source added that Meghan's age could hinder her at-home birth dreams, but she's determined to create new traditions for the Sussex family.
"Meghan is a new-age woman, so obviously the birth will reflect everything about that, and the new generation her and Harry are bringing up."