diff --git a/builtin-setup.c b/builtin-setup.c
index 11aa676..1b865b7 100644
--- a/builtin-setup.c
+++ b/builtin-setup.c
@@ -116,6 +116,7 @@ static const char *guestfs_dirs[] = {
 	"/var",
 	"/var/lib",
 	"/virt",
+	"/virt/home",
 };
 
 static const char *guestfs_symlinks[] = {
diff --git a/guest/init.c b/guest/init.c
index e1f377f..ece48fd 100644
--- a/guest/init.c
+++ b/guest/init.c
@@ -12,7 +12,8 @@
 static int run_process(char *filename)
 {
 	char *new_argv[] = { filename, NULL };
-	char *new_env[] = { "TERM=linux", "DISPLAY=192.168.33.1:0", NULL };
+	char *new_env[] = { "TERM=linux", "DISPLAY=192.168.33.1:0",
+				"HOME=/virt/home", NULL };
 
 	return execve(filename, new_argv, new_env);
 }
@@ -20,7 +21,7 @@ static int run_process(char *filename)
 static int run_process_sandbox(char *filename)
 {
 	char *new_argv[] = { filename, "/virt/sandbox.sh", NULL };
-	char *new_env[] = { "TERM=linux", NULL };
+	char *new_env[] = { "TERM=linux", "HOME=/virt/home", NULL };
 
 	return execve(filename, new_argv, new_env);
 }