diff --git a/src/usr/local/containerbase/bin/install-containerbase.sh b/src/usr/local/containerbase/bin/install-containerbase.sh
index bf2f81b99a..0537040d2e 100755
--- a/src/usr/local/containerbase/bin/install-containerbase.sh
+++ b/src/usr/local/containerbase/bin/install-containerbase.sh
@@ -21,6 +21,8 @@ fi
 
 # shellcheck source=/dev/null
 . /usr/local/containerbase/util.sh
+# shellcheck source=/dev/null
+. /usr/local/containerbase/utils/v2/overrides.sh
 
 if [[ -n "${BASH_ENV}" && "${BASH_ENV}" != "${ENV_FILE}" ]]; then
   echo "Wrong BASH_ENV defined - skipping: ${BASH_ENV}"
@@ -39,22 +41,11 @@ require_root
 
 setup_env_files
 
-echo "APT::Install-Recommends \"false\";" | tee -a /etc/apt/apt.conf.d/containerbase.conf
-echo "APT::Get::Install-Suggests \"false\";" | tee -a /etc/apt/apt.conf.d/containerbase.conf
-
-# Set up user and home directory
-createUser
+# setup directories for v2 tools
 
-# create env helper paths
-mkdir /usr/local/env.d
-su "${USER_NAME}" -c "mkdir -p \"/home/${USER_NAME}/\"{env.d,bin}"
 
-if [[ "$PATH" =~ (^|:)"/home/${USER_NAME}/bin"(:|$) ]]; then
-  echo "export PATH=\"/home/${USER_NAME}/bin:\${PATH}\"" >> "$ENV_FILE"
-fi
-
-# OpenShift
-chmod -R g+w "/home/${USER_NAME}"
+echo "APT::Install-Recommends \"false\";" | tee -a /etc/apt/apt.conf.d/containerbase.conf
+echo "APT::Get::Install-Suggests \"false\";" | tee -a /etc/apt/apt.conf.d/containerbase.conf
 
 export_env DEBIAN_FRONTEND "noninteractive"
 export_env LC_ALL "C.UTF-8"
@@ -99,17 +90,39 @@ link_tools
 
 
 # do this at the end as we are overwriting certain env vars and functions
-function prepare_v2_tools () {
-  # setup directories for v2 tools
-  # shellcheck source=/dev/null
-  . /usr/local/containerbase/utils/v2/overrides.sh
+function prepare_system () {
+  echo "Setting up system"
 
   setup_directories
 
   # compability with current custom images
   ln -sf /usr/local/sbin/install-containerbase /usr/local/bin/install-containerbase
 }
-prepare_v2_tools
+prepare_system
+
+function prepare_user() {
+  echo "Setting up user"
+  local install_dir
+  install_dir=$(get_install_dir)
+
+  # Set up user and home directory
+  createUser "${install_dir}/home"
+
+  # create symlink for compabillity
+  ln -sf "${install_dir}/home" "/home/${USER_NAME}"
+
+  # create env helper paths
+  mkdir /usr/local/env.d
+  su "${USER_NAME}" -c "mkdir -p \"/home/${USER_NAME}/\"{env.d,bin}"
+
+  if [[ "$PATH" =~ (^|:)"/home/${USER_NAME}/bin"(:|$) ]]; then
+    echo "export PATH=\"/home/${USER_NAME}/bin:\${PATH}\"" >> "$ENV_FILE"
+  fi
+
+  # OpenShift
+  chmod -R g+w "${install_dir}/home"
+}
+prepare_user
 
 # cleanup
 rm -rf /var/lib/apt/lists/* /var/log/dpkg.* /var/log/apt
diff --git a/src/usr/local/containerbase/utils/filesystem.sh b/src/usr/local/containerbase/utils/filesystem.sh
index 150a34135f..c5f6495d82 100644
--- a/src/usr/local/containerbase/utils/filesystem.sh
+++ b/src/usr/local/containerbase/utils/filesystem.sh
@@ -46,6 +46,8 @@ function setup_directories () {
   local install_dir
   install_dir=$(get_install_dir)
 
+  echo "Setting up directories in ${install_dir}"
+
   mkdir -p "${install_dir}"
   # contains the installed tools
   # shellcheck disable=SC2174
diff --git a/src/usr/local/containerbase/utils/user.sh b/src/usr/local/containerbase/utils/user.sh
index 30f65de22d..6aa593406f 100644
--- a/src/usr/local/containerbase/utils/user.sh
+++ b/src/usr/local/containerbase/utils/user.sh
@@ -1,8 +1,9 @@
 #!/bin/bash
 
 function createUser() {
+  local home_dir=${1}
   # Set up user and home directory with access to users in the root group (0)
   # https://docs.openshift.com/container-platform/3.6/creating_images/guidelines.html#use-uid
   groupadd --gid "${USER_ID}" "${USER_NAME}";
-  useradd --uid "${USER_ID}" --gid "${PRIMARY_GROUP_ID}" --groups "0,${USER_ID}" --shell /bin/bash --create-home "${USER_NAME}"
+  useradd --uid "${USER_ID}" --gid "${PRIMARY_GROUP_ID}" --groups "0,${USER_ID}" --shell /bin/bash --home-dir "${home_dir}" --create-home "${USER_NAME}"
 }
diff --git a/src/usr/local/containerbase/utils/v2/overrides.sh b/src/usr/local/containerbase/utils/v2/overrides.sh
index c80ff4b5af..4cd4ca8a50 100644
--- a/src/usr/local/containerbase/utils/v2/overrides.sh
+++ b/src/usr/local/containerbase/utils/v2/overrides.sh
@@ -10,6 +10,10 @@ export ROOT_DIR_LEGACY="${ROOT_DIR}"
 # shellcheck disable=SC2168,SC2034
 export ROOT_DIR=/opt/containerbase
 
+# we need to set the user home directory to the new root directory
+# shellcheck disable=SC2153
+export USER_HOME="${ROOT_DIR}/home"
+
 # get path location
 DIR="${BASH_SOURCE%/*}"
 if [[ ! -d "$DIR" ]]; then DIR="$PWD"; fi
diff --git a/test/node/Dockerfile b/test/node/Dockerfile
index 5cfe3543ed..d3d5c93bf4 100644
--- a/test/node/Dockerfile
+++ b/test/node/Dockerfile
@@ -20,7 +20,11 @@ RUN set -ex; ls -la /usr/local/bin/; ls -la /usr/local/sbin;
 
 RUN install-containerbase
 
-RUN set -ex; ls -la /usr/local/bin/; ls -la /usr/local/sbin; ls -la /opt/containerbase/bin;
+RUN set -ex; \
+  ls -la /home/; \
+  ls -la /opt/containerbase/; \
+  ls -la /opt/containerbase/home; \
+  true
 
 COPY --chown=1000:0 test/node/test test
 RUN chmod -R 775 /test
@@ -74,7 +78,7 @@ ARG APT_HTTP_PROXY
 RUN npm install -g yarn
 
 RUN set -ex; \
-  [ "$(command -v yarn)" = "/home/${USER_NAME}/.npm-global/bin/yarn" ] && echo "works" || exit 1; \
+  [ "$(command -v yarn)" = "/opt/containerbase/home/.npm-global/bin/yarn" ] && echo "works" || exit 1; \
   yarn --version;
 
 RUN set -ex; cd a; yarn; [[ -d node_modules/.bin ]] || exit 1
@@ -115,7 +119,7 @@ RUN set -ex; cd a; pnpm i
 SHELL [ "/bin/sh", "-c" ]
 RUN set -ex; \
   pnpm --version \
-  [ "$(command -v pnpm)" = "/home/${USER_NAME}/bin/pnpm" ] && echo "works" || exit 1;
+  [ "$(command -v pnpm)" = "/opt/containerbase/home/bin/pnpm" ] && echo "works" || exit 1;
 
 #--------------------------------------
 # test: node 18
@@ -132,13 +136,13 @@ RUN install-tool node v18.19.0
 
 RUN npm install -g yarn
 RUN set -ex; \
-  [ "$(command -v yarn)" = "/home/${USER_NAME}/.npm-global/bin/yarn" ] && echo "works" || exit 1; \
+  [ "$(command -v yarn)" = "/opt/containerbase/home/.npm-global/bin/yarn" ] && echo "works" || exit 1; \
   yarn --version;
 
 # renovate: datasource=npm
 RUN install-tool yarn 1.22.21
 RUN set -ex; \
-  [ "$(command -v yarn)" = "/home/${USER_NAME}/.npm-global/bin/yarn" ] && echo "works" || exit 1; \
+  [ "$(command -v yarn)" = "/opt/containerbase/home/.npm-global/bin/yarn" ] && echo "works" || exit 1; \
   yarn --version;
 
 
@@ -276,7 +280,7 @@ ARG APT_HTTP_PROXY
 RUN npm install -g yarn
 
 RUN set -ex; \
-  [ "$(command -v yarn)" = "/home/${USER_NAME}/.npm-global/bin/yarn" ] && echo "works" || exit 1; \
+  [ "$(command -v yarn)" = "/opt/containerbase/home/.npm-global/bin/yarn" ] && echo "works" || exit 1; \
   yarn --version;
 
 RUN set -ex; ls -lah /test/a; cd a; yarn