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Abstract In this article, we introduce the “dwelling paradox” to explore how the state actively produces water insecurity for people experiencing homelessness in the Global North. We explain that the dwelling paradox is (1) produced by a modernist ideology of public service delivery that privileges water provision through private infrastructural connections in the home; (2) is reproduced by the welfare‐warfare state, which has increasingly weaponized public water facilities and criminalized body functions in public space; and (3) is actively contested by some houseless communities, who challenge hegemonic ideals of the “home”—and its water infrastructure—as a private, atomized space. In advancing a relational and spatial understanding of water insecurity, we use the dwelling paradox to illustrate how unhoused people are caught in a space of institutional entrapment that is forged by state power and amplified by anti‐homeless legislation. Such spaces of entrapment make it extremely difficult for unhoused people to achieve a safe, healthy, and thriving life—the basis of the human rights to water and sanitation. This article is categorized under:Human Water > Water Governance