Energy consumption of buildings is greatly affected by the criteria used for the indoor environment (heating, ventilation, and lighting) as well as the operation and design of the building. The building sector plays a crucial role in attaining energy and environmental goals, since around one-third of the total energy is used to heat, cool, ventilate, and control humidity to maintain thermal comfort of the occupants. This research presents a comprehensive study of the dynamic simulation of a single-story family house in two distinct geographical regions: Budapest, Hungary and Bareilly, India. The investigation includes dynamic simulation according to EN 15026:2023 standard to evaluate a family house's energy performance and hygrothermal performance under varying climatic conditions, considering hourly weather data and occupancy-specific internal load available in the Wufi library. The research methodology involves a 3D building model created within Wufi Plus software to represent family houses based on traditional methods and standard engineering structures, incorporating architectural and structural aspects, as well as mechanical HVAC systems. Overall, 6 case studies were developed to explore how these parameters influence indoor thermal performance, moisture management, and energy efficiency, specifically focusing on the various thermal insulation and building materials. The results demonstrate clear effects on energy performance and indoor environment after applying thermal insulation. In terms of heating and cooling demand, insulation led to substantial energy savings: in Bareilly, heating demand decreased by up to 99% and cooling demand by 60% compared to uninsulated cases. In Budapest, insulation reduced heating demand by up to 83% and cooling demand 32%, indicating different patterns of energy gains and losses across climates. Additionally, indoor air quality (IAQ) initially deteriorated with insulation but improved after increasing the infiltration air change rate per hour. This research contributes valuable insights into the construction industry on using insulation and appropriate building materials to enhance energy efficiency and indoor climate control. The findings support researchers, architects, and structural designers in creating sustainable buildings with optimized energy performance, aligning with global climate goals.