diff --git a/rust/src/composepost.rs b/rust/src/composepost.rs
index dd66870385..9bd558e948 100644
--- a/rust/src/composepost.rs
+++ b/rust/src/composepost.rs
@@ -16,12 +16,71 @@
  * Foundation, Inc., 51 Franklin St, Fifth Floor, Boston, MA 02110-1301 USA
  */
 
-use openat;
 use failure::Fallible;
+use openat;
+use std::io::{BufRead, Write};
+use std::path::Path;
+use std::{fs, io};
+
+/// Helper functions for openat::Dir
+trait OpenatDirExt {
+    // IMO should propose this at least in a "utils" bit of the openat crate;
+    // Like 95% of the time I'm looking at errno (with files) it's for ENOENT,
+    // and Rust has an elegant way to map that with Option<>.  Every other
+    // error I usually just want to propagate back up.
+    fn open_file_optional<P: openat::AsPath>(&self, p: P) -> io::Result<Option<fs::File>>;
+}
+
+impl OpenatDirExt for openat::Dir {
+    fn open_file_optional<P: openat::AsPath>(&self, p: P) -> io::Result<Option<fs::File>> {
+        match self.open_file(p) {
+            Ok(f) => Ok(Some(f)),
+            Err(e) => {
+                if e.kind() == io::ErrorKind::NotFound {
+                    Ok(None)
+                } else {
+                    Err(e)
+                }
+            }
+        }
+    }
+}
+
+// rpm-ostree uses /home → /var/home by default as generated by our
+// rootfs; we don't expect people to change this.  Let's be nice
+// and also fixup the $HOME entries generated by `useradd` so
+// that `~` shows up as expected in shells, etc.
+//
+// https://github.com/coreos/fedora-coreos-config/pull/18
+// https://pagure.io/workstation-ostree-config/pull-request/121
+// https://discussion.fedoraproject.org/t/adapting-user-home-in-etc-passwd/487/6
+// https://github.com/justjanne/powerline-go/issues/94
+fn postprocess_useradd(rootfs_dfd: &openat::Dir) -> Fallible<()> {
+    let path = Path::new("usr/etc/default/useradd");
+    if let Some(f) = rootfs_dfd.open_file_optional(path)? {
+        let mut f = io::BufReader::new(f);
+        let tmp_path = path.parent().unwrap().join("useradd.tmp");
+        let o = rootfs_dfd.write_file(&tmp_path, 0644)?;
+        let mut bufw = io::BufWriter::new(&o);
+        for line in f.lines() {
+            let line = line?;
+            if !line.starts_with("HOME=") {
+                bufw.write(line.as_bytes())?;
+            } else {
+                bufw.write("HOME=/var/home".as_bytes())?;
+            }
+            bufw.write("\n".as_bytes())?;
+        }
+        bufw.flush()?;
+        rootfs_dfd.local_rename(&tmp_path, path)?;
+    }
+    Ok(())
+}
 
 // This function is called from rpmostree_postprocess_final(); think of
 // it as the bits of that function that we've chosen to implement in Rust.
-fn compose_postprocess_final(_rootfs_dfd: &openat::Dir) -> Fallible<()> {
+fn compose_postprocess_final(rootfs_dfd: &openat::Dir) -> Fallible<()> {
+    postprocess_useradd(rootfs_dfd)?;
     Ok(())
 }
 
diff --git a/tests/compose-tests/libbasic-test.sh b/tests/compose-tests/libbasic-test.sh
index 3866b0b68d..11e8dae863 100644
--- a/tests/compose-tests/libbasic-test.sh
+++ b/tests/compose-tests/libbasic-test.sh
@@ -19,6 +19,11 @@ validate_passwd() {
 validate_passwd passwd
 validate_passwd group
 
+
+ostree --repo=${repobuild} cat ${treeref} /usr/etc/default/useradd > useradd.txt
+assert_file_has_content_literal useradd.txt HOME=/var/home
+echo "ok etc/default/useradd"
+
 for path in /usr/share/rpm /usr/lib/sysimage/rpm-ostree-base-db; do
     ostree --repo=${repobuild} ls -R ${treeref} ${path} > db.txt
     assert_file_has_content_literal db.txt /Packages