diff --git a/util.go b/util.go
index b78896963..cee6b2429 100644
--- a/util.go
+++ b/util.go
@@ -91,13 +91,22 @@ func insensitiviseMap(m map[string]interface{}) {
 func absPathify(inPath string) string {
 	jww.INFO.Println("Trying to resolve absolute path to", inPath)
 
-	if strings.HasPrefix(inPath, "$HOME") {
+	if inPath == "$HOME" || strings.HasPrefix(inPath, "$HOME"+string(os.PathSeparator)) {
 		inPath = userHomeDir() + inPath[5:]
 	}
 
 	if strings.HasPrefix(inPath, "$") {
 		end := strings.Index(inPath, string(os.PathSeparator))
-		inPath = os.Getenv(inPath[1:end]) + inPath[end:]
+
+		var value, suffix string
+		if end == -1 {
+			value = os.Getenv(inPath[1:])
+		} else {
+			value = os.Getenv(inPath[1:end])
+			suffix = inPath[end:]
+		}
+
+		inPath = value + suffix
 	}
 
 	if filepath.IsAbs(inPath) {
diff --git a/util_test.go b/util_test.go
index 0af80bb63..01d932d4e 100644
--- a/util_test.go
+++ b/util_test.go
@@ -11,6 +11,8 @@
 package viper
 
 import (
+	"os"
+	"path/filepath"
 	"reflect"
 	"testing"
 )
@@ -52,3 +54,38 @@ func TestCopyAndInsensitiviseMap(t *testing.T) {
 		t.Fatal("Input map changed")
 	}
 }
+
+func TestAbsPathify(t *testing.T) {
+	home := userHomeDir()
+	homer := filepath.Join(home, "homer")
+	wd, _ := os.Getwd()
+
+	os.Setenv("HOMER_ABSOLUTE_PATH", homer)
+	os.Setenv("VAR_WITH_RELATIVE_PATH", "relative")
+
+	tests := []struct {
+		input  string
+		output string
+	}{
+		{"", wd},
+		{"sub", filepath.Join(wd, "sub")},
+		{"./", wd},
+		{"./sub", filepath.Join(wd, "sub")},
+		{"$HOME", home},
+		{"$HOME/", home},
+		{"$HOME/sub", filepath.Join(home, "sub")},
+		{"$HOMER_ABSOLUTE_PATH", homer},
+		{"$HOMER_ABSOLUTE_PATH/", homer},
+		{"$HOMER_ABSOLUTE_PATH/sub", filepath.Join(homer, "sub")},
+		{"$VAR_WITH_RELATIVE_PATH", filepath.Join(wd, "relative")},
+		{"$VAR_WITH_RELATIVE_PATH/", filepath.Join(wd, "relative")},
+		{"$VAR_WITH_RELATIVE_PATH/sub", filepath.Join(wd, "relative", "sub")},
+	}
+
+	for _, test := range tests {
+		got := absPathify(test.input)
+		if got != test.output {
+			t.Errorf("Got %v\nexpected\n%q", got, test.output)
+		}
+	}
+}