There are basically four options for staying on the Island.
Hotel, expensive but you don’t need to take much kit with you, ideal if you are on a bike. Costs upwards of £100 a day if you can get a room, most will be booked the year before.
Bed and Breakfast the same as a Hotel but cheaper and again difficult to book as a lot of TT fans will book on arrival for the following year.
Home stay, like BnB but staying in someone's house. This can be as cheep as £25 a night for basic accommodation, going into hotel costs for a top end room with en-suite bathroom. Two great things about home stay is the local knowledge about the TT that you can glean from your hosts, and drying facilities. If the weather is bad this is a good option.
Camping, cheap, from £10 a night. The down side is you will need to take a lot of camping equipment. It can be done on a bike but if the weather is inclement it's not much fun. Most campsites have laundry and drying facilities as well as good showers these days and power at extra cost. On the upside, due to the nature of camping you are going to meet people, so it can be more fun than being isolated in a hotel and if the weather is good, a great laugh.