diff --git a/changelog/64121.fixed.md b/changelog/64121.fixed.md
new file mode 100644
index 000000000000..255c1ca2b288
--- /dev/null
+++ b/changelog/64121.fixed.md
@@ -0,0 +1 @@
+Prevent `_pygit2.GitError: error loading known_hosts` with certain pygit2/libgit2 versions.
diff --git a/salt/utils/gitfs.py b/salt/utils/gitfs.py
index 733ed3e29449..ffcae96f4537 100644
--- a/salt/utils/gitfs.py
+++ b/salt/utils/gitfs.py
@@ -119,6 +119,15 @@
 
     with warnings.catch_warnings():
         warnings.simplefilter("ignore")
+        if "HOME" not in os.environ:
+            # Make sure $HOME env variable is set before importing pygit2 to prevent
+            # _pygit2.GitError: error loading known_hosts in some libgit2 versions.
+            # The internal "git_sysdir__dirs" from libgit2, is initializated
+            # when importing pygit2. The $HOME env must be present to allow libgit2
+            # guessing function to successfully set the homedir in the initializated
+            # libgit2 stack.
+            # https://github.com/saltstack/salt/issues/64121
+            os.environ["HOME"] = os.path.expanduser("~")
         import pygit2
     PYGIT2_VERSION = Version(pygit2.__version__)
     LIBGIT2_VERSION = Version(pygit2.LIBGIT2_VERSION)
@@ -2012,13 +2021,9 @@ def init_remote(self):
         """
         # https://github.com/libgit2/pygit2/issues/339
         # https://github.com/libgit2/libgit2/issues/2122
-        # https://github.com/saltstack/salt/issues/64121
-        home = os.path.expanduser("~")
-        if "HOME" not in os.environ:
-            # Make sure $HOME env variable is set to prevent
-            # _pygit2.GitError: error loading known_hosts in some libgit2 versions.
-            os.environ["HOME"] = home
-        pygit2.settings.search_path[pygit2.GIT_CONFIG_LEVEL_GLOBAL] = home
+        pygit2.settings.search_path[pygit2.GIT_CONFIG_LEVEL_GLOBAL] = (
+            os.path.expanduser("~")
+        )
         new = False
         if not os.listdir(self._cachedir):
             # Repo cachedir is empty, initialize a new repo there
diff --git a/tests/pytests/unit/utils/test_gitfs.py b/tests/pytests/unit/utils/test_gitfs.py
index 683ac1a0333a..4df5b9af7bea 100644
--- a/tests/pytests/unit/utils/test_gitfs.py
+++ b/tests/pytests/unit/utils/test_gitfs.py
@@ -1,3 +1,4 @@
+import importlib
 import os
 import time
 
@@ -264,7 +265,7 @@ def test_checkout_pygit2_with_home_env_unset(_prepare_provider):
     provider.credentials = None
     with patched_environ(__cleanup__=["HOME"]):
         assert "HOME" not in os.environ
-        provider.init_remote()
+        importlib.reload(salt.utils.gitfs)
         assert "HOME" in os.environ