diff --git a/.env.example b/.env.example
index c7d60ea..dac5887 100644
--- a/.env.example
+++ b/.env.example
@@ -3,3 +3,8 @@ ELECTRUM_VERSION=4.7.2
 
 # Telegram bot token from @BotFather
 TELEGRAM_BOT_TOKEN=your_bot_token_here
+
+# Local / Umbrel mode only: IP address of your Umbrel node.
+# umbrel.local will NOT resolve inside the container — use the actual IP.
+# Example: UMBREL_IP=192.168.1.100
+UMBREL_IP=
diff --git a/.gitignore b/.gitignore
index 83a921e..4f35006 100644
--- a/.gitignore
+++ b/.gitignore
@@ -1,3 +1,4 @@
 .env
+allowed_users.txt
 *.pyc
 __pycache__/
diff --git a/README.md b/README.md
index 1fb6292..351b697 100644
--- a/README.md
+++ b/README.md
@@ -50,6 +50,7 @@ TELEGRAM_BOT_TOKEN=your_bot_token_here
 ### 3. Add your Telegram user ID to the allowed users list
 
 ```bash
+cp allowed_users.txt.example allowed_users.txt
 nano allowed_users.txt
 ```
 
@@ -82,6 +83,61 @@ You should see `Electrum daemon started. Launching bot...` followed by the bot s
 
 ---
 
+## Local / Umbrel Mode
+
+Use this mode to connect to your own Electrum server running on Umbrel (or any local node) on your home network.
+
+> **Note:** `umbrel.local` does not resolve inside Docker containers — mDNS is host-only. Use the actual **IP address** of your Umbrel device (e.g. `192.168.1.100`).
+
+### Setup
+
+```bash
+cp .env.example .env
+nano .env
+```
+
+Fill in `TELEGRAM_BOT_TOKEN` and set your Umbrel's IP:
+
+```
+UMBREL_IP=192.168.1.100
+```
+
+```bash
+cp allowed_users.txt.example allowed_users.txt
+nano allowed_users.txt
+```
+
+### Start
+
+```bash
+docker compose -f docker-compose.local.yml up -d --build
+```
+
+### How it works
+
+On first start, the entrypoint writes `./electrum-data/config` with:
+
+```json
+{
+    "auto_connect": false,
+    "enable_proxy": false,
+    "oneserver": true,
+    "server": "192.168.1.100:50001:t"
+}
+```
+
+If the config file already exists it is left untouched, so manual edits survive restarts.
+
+> **If the connection doesn't work:** check `./electrum-data/config` after the first run and make sure the server string still ends in `:t` (TCP). Electrum may rewrite it to `:s` (SSL) on first connect. If it did, stop the container, change it back to `:t`, and restart.
+
+### Check logs
+
+```bash
+docker compose -f docker-compose.local.yml logs -f
+```
+
+---
+
 ## Tor Mode
 
 Tor mode runs Electrum through the Tor network. It uses a separate Docker Compose file and Dockerfile so the standard setup is not affected.
diff --git a/allowed_users.txt.example b/allowed_users.txt.example
new file mode 100644
index 0000000..9e22c12
--- /dev/null
+++ b/allowed_users.txt.example
@@ -0,0 +1,5 @@
+# Add one Telegram user per line in the format: userid, Name
+# Find your user ID by messaging @userinfobot on Telegram.
+# Example:
+# 123456789, Alice
+# 987654321, Bob
diff --git a/entrypoint.local.sh b/entrypoint.local.sh
index fb1cc94..1e318a6 100644
--- a/entrypoint.local.sh
+++ b/entrypoint.local.sh
@@ -1,17 +1,19 @@
 #!/usr/bin/env bash
 set -e
 
+: "${UMBREL_IP:?UMBREL_IP is not set. Add it to your .env file (e.g. UMBREL_IP=192.168.1.100)}"
+
 mkdir -p /root/.electrum/wallets
 
 CONFIG="/root/.electrum/config"
 if [ ! -f "$CONFIG" ]; then
     echo "Writing default config..."
-    cat > "$CONFIG" <<'EOF'
+    cat > "$CONFIG" <<EOF
 {
     "auto_connect": false,
     "enable_proxy": false,
     "oneserver": true,
-    "server": "umbrel.local:50001:t"
+    "server": "${UMBREL_IP}:50001:t"
 }
 EOF
 fi