Proxmox vs Unraid for a First Home Server: VMs First or Disks First

Almost everyone building a first home server asks the same question: Proxmox or Unraid? Forums answer it with a feature comparison, and both lists are long and impressive. The more useful question is simpler. What is this machine mainly for: running virtual machines, or holding disks full of data?

I spent a decade in data-centre storage before my homelab got out of hand, and I have run both as the base of a home server. They are excellent at different jobs. Proxmox is a hypervisor that can manage storage. Unraid is a storage system that can run virtual machines. Get the order right and either one is a pleasure. Get it wrong and you spend a year working around the tool.

Hypervisor first or storage first

If your server is VMs first, meaning several virtual machines, lab environments, or a mix of Linux and Windows guests, choose Proxmox VE. It is free, built for virtualisation, and has ZFS and snapshots built in.

If your server is disks first, meaning a growing media library on a pile of different-sized hard drives with a handful of Docker apps, choose Unraid. It lets you mix drive sizes, add disks one at a time, and spin down idle drives, and its app store makes Docker easy.

A free hypervisor and a paid storage OS

Proxmox VE is a free, open-source virtualisation platform built on Debian. It runs full virtual machines with KVM and lightweight Linux containers with LXC, all managed through a web interface. It has native ZFS support, snapshots, backups (especially paired with Proxmox Backup Server), and clustering if you ever add a second or third machine. A paid subscription gives access to the enterprise update repository and support, but the free no-subscription repository is fully usable at home; you just dismiss a reminder when you log in.

Unraid is a commercial operating system for home servers and NAS boxes. It boots from a USB flash drive, and your licence is tied to that drive. Its signature feature is the Unraid array: a set of data disks of any size, protected by one or two parity drives. It also supports ZFS and Btrfs pools, typically for fast SSD storage, and it has a well-loved Docker app store, Community Applications, plus support for VMs.

Storage: where Unraid is different

Most home servers end up as storage servers, even ones that started as something else. Storage is also where the two are most different.

The Unraid array keeps each data disk as its own separate filesystem. Files are written whole to one disk, and the parity drive (or two) lets you rebuild any single failed disk (or two). That design has big practical advantages for a home library:

• Mixed sizes. A 4 TB, an 8 TB and a 12 TB drive all contribute their full capacity. The only rule is that parity must be at least as large as the biggest data disk.
• Grow one disk at a time. Buy a drive when you need space, add it, and the array grows.
• Spin-down. Only the disk holding the file you are reading needs to spin. The rest stay idle, which saves power and noise in a media server that is mostly asleep.
• Partial survival. If you lose more disks than parity can cover, the surviving disks still hold readable files, because no file is striped across drives.

The trade-off is speed. Writing to the array means updating parity, so writes are much slower than to a striped pool. Unraid deals with this using an SSD cache pool: new files land on fast SSDs and move to the array overnight. For a media library, that works very well. For a database or VM disks that need consistent speed, keep them on an SSD pool, not on the array.

Proxmox usually stores data on ZFS, which is a different philosophy: data is striped across disks with checksums on every block, giving strong integrity guarantees and good performance. But ZFS wants matched disks. Mixing a 4 TB and a 12 TB drive in the same group wastes most of the larger one. Recent versions of OpenZFS can expand a RAID-Z group one disk at a time, which is a welcome improvement, but planning a pool around disks you already own is still more awkward than with Unraid. ZFS pools also keep every disk spinning. If you want the deeper trade-offs of ZFS against alternatives, they are covered in ZFS RAID-Z2 vs Btrfs RAID on a single box.

Virtual machines: where Proxmox is in its element

Proxmox exists to run VMs, and it shows. Creating a VM is quick. Snapshots are instant on ZFS, so trying a risky upgrade inside a VM costs nothing: snapshot, upgrade, roll back if it breaks. Backups are built in and run on a schedule. LXC containers let you run lightweight Linux services with almost no overhead. Passing a GPU or a whole disk controller through to a VM is well documented and widely done.

If you ever add a second machine, Proxmox clusters them under one interface and can move VMs between hosts. Few homelabs need that, but those who build one are glad it is there.

Unraid runs VMs well enough for common cases: a Windows VM for a game or a utility, a Home Assistant VM, a test Linux machine. GPU passthrough works, and plenty of people run gaming VMs on Unraid. But the VM tooling is simpler. Snapshots and backups for VMs are less integrated, and there is no clustering. If VMs are the centre of what you do, you will feel the difference.

Docker apps: where Unraid is easiest

For most home servers, the actual workload is a dozen Docker apps: Plex or Jellyfin, the *arr stack, Immich, a reverse proxy, a password manager.

Unraid makes this easy. The Community Applications store lists thousands of apps with pre-filled templates. You click install, check the paths and ports, and the container runs. You can manage it all from the web interface without touching a command line. For many people, this is the reason to choose Unraid.

Proxmox does not run Docker directly. The usual approach is a Linux VM, or an LXC container, running Docker or Docker Compose, which you manage yourself. That is more work at first, but many people prefer it: your apps are defined in Compose files you control, the whole Docker host can be snapshotted and backed up as one unit, and you are not tied to a vendor’s app templates.

Cost, licensing and the USB stick

Proxmox is free. You can run it at home indefinitely without paying.

Unraid costs money. Its licensing changed in 2024 to tiers that differ by number of drives and by how long you receive updates, with a lifetime option. It is not expensive for what it does, but it is a cost, and you should check the current tiers before you buy.

Unraid’s USB boot drive is another thing to plan for. The licence is tied to the flash drive, the operating system runs from RAM, and the drive holds your configuration. Use a good-quality drive, back up its configuration (Unraid can do this to its cloud service or to a share), and know the process for moving a licence to a replacement drive. USB sticks do fail, and a dead one at the wrong moment is a stressful evening. If the USB boot model worries you, the TrueNAS SCALE vs Unraid comparison covers a storage-first alternative that boots from a normal disk.

The combination people end up with

Many homelabs end up combining the two ideas rather than choosing one forever:

• Proxmox on the host, a storage VM inside. Proxmox runs the machine, and a VM running TrueNAS, or even Unraid with its USB stick passed through, manages the data disks via a passed-through disk controller. This gives you Proxmox’s VM tools with a storage-first system for the disks. It is powerful, but it adds complexity, and getting the passthrough right matters.
• Unraid with a few VMs. Unraid handles storage and apps, and a couple of VMs cover the rest. For most media-focused homes, this is all they ever need.
• Two machines. A storage box (Unraid or TrueNAS) and a separate Proxmox host for VMs, sharing data over the network. More hardware, but each machine does one job well.

Which one to install first

Proxmox is the better base when:

• You plan to run several VMs or LXC containers, or experiment with operating systems.
• You want instant snapshots and scheduled VM backups.
• You are comfortable managing Docker yourself inside a VM or container.
• You want free, open-source software and can buy matched disks for ZFS.
• You might add a second machine later.

Unraid is the better base when:

• Your main job is storing a growing media library on drives of different sizes.
• You want to add one disk at a time as you need space.
• You care about power and noise, and like idle drives spinning down.
• You want Docker apps installed from an app store with minimal command-line work.
• You are happy to pay for a polished, home-focused product.

Neither choice is permanent, but changing later means moving all your data, which is never fun. So decide what the machine is for before you decide what it runs. If you are going to spend most of your time inside VMs, start with Proxmox. If you are going to spend most of your money on hard drives, start with Unraid.