More than 60 million homes in India are unfit for decent living. Replacing this stock with decent housing will entail significant costs and increase energy consumption and related CO2 emissions due to both upfront and long-term energy requirements. This paper assesses the life cycle costs (LCC), life cycle energy (LCE) and CO2 emissions impacts of filling the current housing gap with different building materials and technologies, and maintaining reasonable standards of indoor temperature and humidity. These outcomes are assessed under different climatic conditions and residential behavioural patterns, using urban and rural housing archetypes, and considering conventional as well as low-cost materials and energy-savings measures. The results demonstrate that stabilized-earth blocks are a preferred solution to the prevailing norm of fired bricks. Along with filler slab and roof insulation, they offer a win–win solution to reduce both LCC by 18% and LCE by 17% compared with conventional techniques in bridging the housing gap. LCE savings can be further increased to 28% without increasing the investment cost compared with conventional solutions. The insights provided by this study on abatement costs and efficacy can be used by policy-makers for affordable housing and climate-related policies.