Housing inadequacies in developing countries often fail to meet the functional and adaptable needs of low-income households. Previous studies have overlooked the role of multifunctional spaces in achieving affordability. This study evaluates the role of multifunctional spaces in achieving housing affordability. Focusing on Iba and Abesan—two government-built estates in Lagos, Nigeria—the study employs a mixed-methods approach, collecting data from 375 residents and analyzing it using descriptive statistics, ANOVA, and multiple regression at a 5% significance level. The findings reveal that affordability is significantly enhanced by the multifunctional use of core housing components-activity-based use of space, non-physical spatial flexibility, and internal design configuration. The regression model demonstrated a strong explanatory power (R2 = 0.988), with space flexibility contributing most significantly to affordability outcomes (β = 0.925 or 92.5%). Residents frequently repurposed interior areas such as bathrooms, balconies, corridors, and living rooms for alternative uses like washing, sleeping, praying, or studying. This adaptive reuse underscores the necessity of designing interiors that support diverse functions within limited space. The study advocates for a shift in the design of low-cost housing toward adaptable systems. Bathrooms should be designed to support both bathing and washing activities, balconies and corridors should allow for cooking or laundry, and open-plan living areas should include convertible furniture. Sufficient ceiling heights should support vertical uses such as loft storage. These interventions reduce costly renovations and support long-term usability, ultimately enhancing housing affordability and sustainability for low-income households in urban Nigeria.