diff --git a/crates/server/src/routes/projects.rs b/crates/server/src/routes/projects.rs
index 5d7141be..6b30b1ab 100644
--- a/crates/server/src/routes/projects.rs
+++ b/crates/server/src/routes/projects.rs
@@ -61,8 +61,7 @@ pub async fn create_project(
     tracing::debug!("Creating project '{}'", name);
 
     // Validate and setup git repository
-    // Expand tilde in git repo path if present
-    let path = expand_tilde(&git_repo_path);
+    let path = std::path::absolute(expand_tilde(&git_repo_path))?;
     // Check if git repo path is already used by another project
     match Project::find_by_git_repo_path(&deployment.db().pool, path.to_string_lossy().as_ref())
         .await
diff --git a/frontend/src/components/dialogs/projects/ProjectFormDialog.tsx b/frontend/src/components/dialogs/projects/ProjectFormDialog.tsx
index 536c4387..68bf45c1 100644
--- a/frontend/src/components/dialogs/projects/ProjectFormDialog.tsx
+++ b/frontend/src/components/dialogs/projects/ProjectFormDialog.tsx
@@ -107,12 +107,11 @@ export const ProjectFormDialog = NiceModal.create<ProjectFormDialogProps>(
       try {
         let finalGitRepoPath = gitRepoPath;
         if (repoMode === 'new') {
-          // Use home directory (~) if parentPath is empty
-          const effectiveParentPath = parentPath.trim() || '~';
-          finalGitRepoPath = `${effectiveParentPath}/${folderName}`.replace(
-            /\/+/g,
-            '/'
-          );
+          const effectiveParentPath = parentPath.trim();
+          const cleanFolderName = folderName.trim();
+          finalGitRepoPath = effectiveParentPath
+            ? `${effectiveParentPath}/${cleanFolderName}`.replace(/\/+/g, '/')
+            : cleanFolderName;
         }
         // Auto-populate name from git repo path if not provided
         const finalName =
diff --git a/frontend/src/components/projects/project-form-fields.tsx b/frontend/src/components/projects/project-form-fields.tsx
index e97d704c..c6266745 100644
--- a/frontend/src/components/projects/project-form-fields.tsx
+++ b/frontend/src/components/projects/project-form-fields.tsx
@@ -349,7 +349,7 @@ export function ProjectFormFields({
                   type="text"
                   value={parentPath}
                   onChange={(e) => setParentPath(e.target.value)}
-                  placeholder="Home"
+                  placeholder="Current Directory"
                   className="flex-1 placeholder:text-secondary-foreground placeholder:opacity-100"
                 />
                 <Button
@@ -371,8 +371,8 @@ export function ProjectFormFields({
                 </Button>
               </div>
               <p className="text-xs text-muted-foreground">
-                Leave empty to use your home directory, or specify a custom
-                path.
+                Leave empty to use your current working directory, or specify a
+                custom path.
               </p>
             </div>
           </div>