In this paper, we explore the design of a virtual reality (VR) application for patients with schizophrenia and bipolar disorder to improve the quality of life of people diagnosed with a severe mental disorder. The purpose was to investigate the feasibility and effectiveness of using VR for rehabilitation purposes and examine usability, and user experience related to using VR. Iterative involvement with proxy end-users in the design underscores the potential of VR for patients with severe mental disorders as long as it is utilized with meticulous attention. From this, seven design guidelines are drawn: (i) focus on modularity in the virtual environment, (ii) reality-based does not mean better, (iii) capitalize on clarity in instructions, (iv) preserve the player's freedom of choice, (v) the importance of customization in the application, (vi) the simplicity in the design and (vii) safeguarding through task-oriented design.