Housing is an important determinant of quality of life and migrants are more likely to encounter poor quality housing than natives. This paper draws on the capabilities approach to welfare economics to examine how issues of housing and neighborhood conditions influence quality of life and opportunities for migrants in Western Europe. The analysis utilizes data from the second European Quality of Life Survey (EQLS) to explore variation in life and housing satisfaction between migrants and non-migrants (natives) in Western Europe and whether being a migrant and living in an ethnically diverse neighborhood contribute to lower satisfaction. The results show that migrants are more likely to experience lower levels of life and housing satisfaction and that living in a diverse neighborhood is negatively associated with life and housing satisfaction. While diverse, inner-city neighborhoods can increase opportunities for labor market access, social services and integration, the tendency towards clustered settlement by migrants can also compound housing inequality. Conversely, migrant homeowners are on average substantially more satisfied with the quality of public services and of their neighborhood and have lower material deprivation than both migrant and non-migrant renters. The findings draw attention to the need to address housing and neighborhood conditions in order to improve opportunities for integration and well-being.