In my state (VT), licensed midwives (CPMs) aren't allowed to do homebirths for clients with any type of diabetes, along with a pretty long list of other conditions (breech presentation, multiples, less than 18 months since C-section, thyroid issues). If they're saying they can't/won't do your homebirth because of state rules/regs, you might be able to find a lay midwife who would be willing to take you as a client. They may also feel that even with well-controlled diabetes, you are not a low-risk pregnancy, and it's a risk they aren't prepared to accept.
I have T2 diabetes as well, treated by oral meds outside of pregnancy. I have been told that I'll need to take insulin during pregnancy--because (a) the oral meds aren't approved for pregnancy (ironic, since Metformin is often prescribed as a fertility drug, so is frequently taken by women while TTC and through the first trimester), (b) the BG numbers you are supposed to meet during pregnancy are so strict that my fairly good control pre-pregnancy won't be good enough during pregnancy (some doctors want fasting BG readings to be under 90, where the non-pregnancy goal is under 100), (c) insulin resistance can increase dramatically during pregnancy, so that you may not be able to stay on just oral meds. With that presumption on the part of the medical establishment, I can understand their blanket "no homebirths for diabetics" stance, even if I'm not thrilled about it, and I don't personally think that well-controlled diabetes should risk you out of homebirth.
Given all that, I'm pretty resigned to having a hospital birth. Luckily, there is a very natural birth friendly hospital with great midwives near me, so I'm hoping that I'll be able to have a low-intervention pregnancy and birth despite my diabetes. I do worry that once they'll peg me as high-risk, I'll be on a totally different, high medicalized "track," but I guess I'll cross that bridge when I come to it.
37, hoping to have a new member of the family in 2016, to join my queer clan: Me
, Things 1&2
, my long-distance KD/cheerleader (the guy who's been telling everyone what a great mom I'm going to be)
, and the rest of the superheroes and sidekicks