diff --git a/libpod/container_internal_linux.go b/libpod/container_internal_linux.go
index 3a71c6601cf7..1056238107f5 100644
--- a/libpod/container_internal_linux.go
+++ b/libpod/container_internal_linux.go
@@ -1717,11 +1717,35 @@ func (c *Container) generateCurrentUserPasswdEntry() (string, int, int, error) {
 	// If the user's actual home directory exists, or was mounted in - use
 	// that.
 	homeDir := c.WorkingDir()
-	if MountExists(c.config.Spec.Mounts, u.HomeDir) {
-		homeDir = u.HomeDir
+	hDir := u.HomeDir
+	for hDir != "/" {
+		if MountExists(c.config.Spec.Mounts, hDir) {
+			homeDir = u.HomeDir
+			break
+		}
+		hDir = filepath.Dir(hDir)
+	}
+	if homeDir != u.HomeDir {
+		for _, hDir := range c.UserVolumes() {
+			if hDir == u.HomeDir {
+				homeDir = u.HomeDir
+				break
+			}
+		}
+	}
+	// Set HOME environment if not already set
+	hasHomeSet := false
+	for _, s := range c.config.Spec.Process.Env {
+		if strings.HasPrefix(s, "HOME=") {
+			hasHomeSet = true
+			break
+		}
+	}
+	if !hasHomeSet {
+		c.config.Spec.Process.Env = append(c.config.Spec.Process.Env, fmt.Sprintf("HOME=%s", homeDir))
 	}
 
-	return fmt.Sprintf("%s:*:%s:%s:%s:%s:/bin/sh\n", u.Username, u.Uid, u.Gid, u.Username, homeDir), uid, rootless.GetRootlessGID(), nil
+	return fmt.Sprintf("%s:*:%s:%s:%s:%s:/bin/sh\n", u.Username, u.Uid, u.Gid, u.Name, homeDir), uid, rootless.GetRootlessGID(), nil
 }
 
 // generateUserPasswdEntry generates an /etc/passwd entry for the container user
diff --git a/test/e2e/toolbox_test.go b/test/e2e/toolbox_test.go
index 6122cee19c60..4f4113bd45a1 100644
--- a/test/e2e/toolbox_test.go
+++ b/test/e2e/toolbox_test.go
@@ -365,4 +365,16 @@ var _ = Describe("Toolbox-specific testing", func() {
 		Expect(session.ExitCode()).To(Equal(0))
 		Expect(session.OutputToString()).To(ContainSubstring("READY"))
 	})
+
+	It("podman run --userns=keep-id check $HOME", func() {
+		var session *PodmanSessionIntegration
+
+		currentUser, err := user.Current()
+		Expect(err).To(BeNil())
+		session = podmanTest.Podman([]string{"run", "-v", fmt.Sprintf("%s:%s", currentUser.HomeDir, currentUser.HomeDir), "--userns=keep-id", fedoraToolbox, "sh", "-c", "echo $HOME"})
+		session.WaitWithDefaultTimeout()
+		Expect(session.ExitCode()).To(Equal(0))
+		Expect(session.OutputToString()).To(ContainSubstring(currentUser.HomeDir))
+	})
+
 })