Objectives Access to stable, safe, and affordable housing is an important determinant of health and community integration among people living with mental illness. Previous studies on housing stability, housing satisfaction and residential preferences among people living with mental illness have primarily been conducted among those with extensive service use experiences. First-time mental health service users, and youth in particular, are likely to present with distinct housing needs. The current study aimed to explore the housing experiences of new mental health service users, as well as the perceived obstacles and facilitators to their residential stability. Methods Projet AMONT is a longitudinal mixed-methods cohort study on the residential trajectories of service users in the 36 months after their initial contact with psychiatric services. The qualitative component consisted in a qualitative descriptive study. Semi-structured individual interviews were conducted with fourteen individuals at the beginning of their service use trajectory. Findings The thematic analysis uncovered how the emergence of mental illness and initial contacts with psychiatric services are associated with transformations in the area of housing and, for many, with housing instability. This instability might occur in continuity with adverse early life trajectories, or through the disruption caused by the emergence of mental illness. Informal social support emerged as the main protective factor against housing instability. Housing satisfaction was associated with multiple and sometimes conflicting needs regarding privacy, safety, social interactions, response to basic needs, performance of activities of daily living, and community integration. The specific developmental issues of youth at the beginning of their service use trajectories influence housing stability and satisfaction. Their housing then becomes a reflection of and laboratory for identity exploration and consolidation. Conclusion The findings highlight the importance of adopting a homelessness prevention lens among people living with a first episode of mental illness, particularly youth with adverse early life trajectories. Many existing approaches could be implemented or strengthened: cross-sector partnerships with all actors present in the trajectories of people with emerging mental illness; family approaches in early intervention, peer support, and screening for unstable housing situations. Adapting practices to the specific developmental characteristics of youth seem to be a key for homelessness prevention for this population.