diff --git a/pkg/cidata/cidata.TEMPLATE.d/boot/20-rootless-base.sh b/pkg/cidata/cidata.TEMPLATE.d/boot/20-rootless-base.sh
index d0efb25401b..821745e8966 100644
--- a/pkg/cidata/cidata.TEMPLATE.d/boot/20-rootless-base.sh
+++ b/pkg/cidata/cidata.TEMPLATE.d/boot/20-rootless-base.sh
@@ -4,6 +4,18 @@ set -eux
 # This script does not work unless systemd is available
 command -v systemctl >/dev/null 2>&1 || exit 0
 
+if [ -O "${LIMA_CIDATA_HOME}" ]; then
+	# Fix ownership of the user home directory when created by root.
+	# In cases where mount points exist in the user's home directory, the home directory and
+	# the mount points are created by root before the user is created. This leads to the home
+	# directory being owned by root.
+	# Following commands fix the ownership of the home directory and its contents (on the same filesystem)
+	# is updated to the correct user.
+	# shellcheck disable=SC2046 # it fails if find results are quoted.
+	chown "${LIMA_CIDATA_USER}" $(find "${LIMA_CIDATA_HOME}" -xdev) ||
+		true # Ignore errors because changing owner of the mount points may fail but it is not critical.
+fi
+
 # Set up env
 for f in .profile .bashrc .zshrc; do
 	if ! grep -q "# Lima BEGIN" "${LIMA_CIDATA_HOME}/$f"; then