The Dutch government is aiming to transition towards a fully circular economy by 2050 to mitigate climate change. To comply with these standards, a transition team for the construction sector has identified biobased materials as a cornerstone for the sector to become circular, enabling a crucial shift because of the sector's large contribution to carbon emissions and environmental pollution. Principles on which this shift relies are focused on environmental health while neglecting human wellbeing, especially mental health as one of the building blocks of human wellbeing (the other being physical health), albeit of great importance due to the significant amount of time humans spend indoors. Mental health is defined by life satisfaction and happiness and is measured through perception and experience. A two-way path is identified: from mental and physical health to human wellbeing. This research aims at identifying the effect of biobased insulation materials on the wellbeing of residents through a pilot study in the Netherlands. Individuals' perceptions and experiences of their living environments—specifically, their homes—serve as the basis for measuring wellbeing in this context. A mixed method is used, combining quantitative and qualitative results from a discrete choice experiment in a virtual reality environment. Participants were presented with three sets of two predetermined configurations. For every set, participants were asked to make a discrete choice between the two alternatives. The results were analysed using a Cox proportional hazard model in SPSS. The quantitative and qualitative data showed several discrepancies, but both emphasised the importance of indoor comfort. It is concluded that biobased insulation materials that ensure good indoor comfort are preferred over materials that don’t. Additionally, the importance of low maintenance needs and a small wall diameter is emphasised to lead to a preferred living environment and thus increased wellbeing. Recommendations to move the model beyond a pilot include diversifying the sample population, materials, and attributes that are presented while aligning these with the target audience, including non-expert views throughout the development of the model, and revealing associations with the materials.