The construction sector is a major contributor to global carbon emissions, necessitating the adoption of sustainable building materials to reduce environmental impact. This study evaluates the energy efficiency and carbon footprint of a mountain house designed with external insulation in Mersin, Turkiye, utilizing eco-friendly and recycled materials. A total of 14 different structural materials were used in the construction, while 4 distinct recycled insulation materials—hemp, sheep wool, cellulose, and recycled denim (cotton)—were incorporated to enhance thermal performance. Additionally, hemplime plaster was applied on both interior and exterior surfaces to improve insulation and sustainability. To assess the environmental performance of these materials, 56 alternative scenarios were developed and analyzed using the IDE-ICE software. Each scenario was evaluated in terms of annual energy consumption and CO2 emissions to determine the most efficient combination of materials. The results highlight the potential of natural and recycled insulation materials in reducing energy demand and minimizing carbon emissions, providing a viable alternative to conventional building materials. This study contributes to the ongoing efforts in sustainable construction by offering a comparative analysis of different eco-friendly materials in a real-world application. The findings serve as a valuable reference for architects, engineers, and policymakers seeking to optimize material selection for energy-efficient and low-carbon buildings, ultimately supporting the transition to more sustainable construction practices.