Developing technology and increasing population cause the natural energy resources rapidly. This has compulsorily forced the countries such as Turkey, which import almost all energy needs and use great deal of it in home heating, to save energy. It will provide benefits for users, indirectly the economy of the country, with saving obtained from insulation. One of the most effective methods attaining gain of energy is heat insulation. While heat insulation is carried out, by determining the optimum efficiency point, the amount of fuel used decreases, which leads to cost reduction and highest efficiency level. Therefore, it is possible to tolerate harmful emissions. In this study, optimum insulation thickness, total cost, energy saving, duration of pay-back and environmental analysis for heating were conducted in Diyarbakır by utilizing different fuel and insulation types. When extruded polystyrene (XPS) was used, average optimum thickness was 0,0675 (m), annual return was 62,165%, duration of pay back was 1,83 (years) and CO2 and SO2 emissions were 76% lesser. When expanded polystyrene (EPS) was used, the parameters such as average optimum thickness 0,0825 (m), annual return 73,06%, duration of pay back 1,245 (years) and CO2 and SO2 emissions 85% lesser.