This paper discusses the application of an innovative methodology for the design of low cost housing in Chile based on the concept of Performance Integrated Design, which aims to change common practice for the development of housing based on prescriptive regulations and non-interdisciplinary work, which has historically resulted in poor quality building requirements. The first stage of the process consisted of defining performance requirements for aspects such as energy demand, U values, air tightness, indoor air quality, etc, for the specific case of low cost houses located in Temuco. The second stage consisted of and integrated design process based on an interdisciplinary team of architects and engineers specialized on each of the performance aspects that were taken into account. The result of this process was a prototype of a low cost house developed for the specific context, which includes passive design strategies for the orientation and group layout, the design of a breathing timber wall with low U-value, ventilation strategies for the supply of fresh air in winter conditions, etc. It is expected that the implications of this work will go beyond the design of a prototype, into improving the methodology for the delivery of low cost housing in Chile.