I don't see a loft area. And what's to the left? We need a bit more info to be useful. But a legal bedroom must have a window, a closet, and not be used for passage to another room...

Here is the full second floor layout - im calling the sitting room a loft it looks over the two story living room.

What do you think about this...

My first impression is that that will work well.

What program did you use, btw?

If you can add some windows to the bathrooms while you’re at it, do so. You could also add skylights.

Program is Floorplanner.com and its free.

Alternative idea...