diff --git a/src/dolphinmainwindow.cpp b/src/dolphinmainwindow.cpp
--- a/src/dolphinmainwindow.cpp
+++ b/src/dolphinmainwindow.cpp
@@ -1220,6 +1220,8 @@
             this, &DolphinMainWindow::openNewTab);
     connect(foldersPanel, &FoldersPanel::errorMessage,
             this, &DolphinMainWindow::showErrorMessage);
+    connect(this, &DolphinMainWindow::settingsChanged,
+	        foldersPanel, &FoldersPanel::refreshFoldersPanel);
 
     // Setup "Terminal"
 #ifndef Q_OS_WIN
diff --git a/src/kitemviews/kfileitemmodel.cpp b/src/kitemviews/kfileitemmodel.cpp
--- a/src/kitemviews/kfileitemmodel.cpp
+++ b/src/kitemviews/kfileitemmodel.cpp
@@ -638,6 +638,11 @@
     QUrl urlToExpand = m_dirLister->url();
     const QStringList subDirs = url.path().mid(pos).split(QDir::separator());
     for (int i = 0; i < subDirs.count() - 1; ++i) {
+        // first subdir can be empty, if m_dirLister->url().path() does not end with '/'
+        // this happens if baseUrl is not root but a home directory, see FoldersPanel
+        if (subDirs.at(i).isEmpty()) {
+            continue;
+        }
         urlToExpand.setPath(urlToExpand.path() + '/' + subDirs.at(i));
         m_urlsToExpand.insert(urlToExpand);
     }
diff --git a/src/panels/folders/dolphin_folderspanelsettings.kcfg b/src/panels/folders/dolphin_folderspanelsettings.kcfg
--- a/src/panels/folders/dolphin_folderspanelsettings.kcfg
+++ b/src/panels/folders/dolphin_folderspanelsettings.kcfg
@@ -10,6 +10,10 @@
             <label>Hidden files shown</label>
             <default>false</default>
         </entry>
+        <entry name="LimitFoldersPanelToHome" type="Bool">
+            <label>Limit folders panel to home directory if inside home</label>
+            <default>true</default>
+        </entry>
         <entry name="AutoScrolling" type="Bool">
             <label>Automatic scrolling</label>
             <default>true</default>
diff --git a/src/panels/folders/folderspanel.h b/src/panels/folders/folderspanel.h
--- a/src/panels/folders/folderspanel.h
+++ b/src/panels/folders/folderspanel.h
@@ -43,7 +43,9 @@
     virtual ~FoldersPanel();
 
     void setShowHiddenFiles(bool show);
+    void setLimitFoldersPanelToHome(bool enable);
     bool showHiddenFiles() const;
+    bool limitFoldersPanelToHome() const;
 
     void setAutoScrolling(bool enable);
     bool autoScrolling() const;
@@ -81,6 +83,9 @@
      */
     void startFadeInAnimation();
 
+public slots:
+    void refreshFoldersPanel();
+
 private:
     /**
      * Initializes the base URL of the tree and expands all
diff --git a/src/panels/folders/folderspanel.cpp b/src/panels/folders/folderspanel.cpp
--- a/src/panels/folders/folderspanel.cpp
+++ b/src/panels/folders/folderspanel.cpp
@@ -82,6 +82,17 @@
     return FoldersPanelSettings::hiddenFilesShown();
 }
 
+void FoldersPanel::setLimitFoldersPanelToHome(bool enable)
+{
+    FoldersPanelSettings::setLimitFoldersPanelToHome(enable);
+    refreshFoldersPanel();
+}
+
+bool FoldersPanel::limitFoldersPanelToHome() const
+{
+    return FoldersPanelSettings::limitFoldersPanelToHome();
+}
+
 void FoldersPanel::setAutoScrolling(bool enable)
 {
     // TODO: Not supported yet in Dolphin 2.0
@@ -122,6 +133,14 @@
     return true;
 }
 
+void FoldersPanel::refreshFoldersPanel()
+{
+    if (m_controller) {
+        loadTree(url());
+    }
+}
+
+
 void FoldersPanel::showEvent(QShowEvent* event)
 {
     if (event->spontaneous()) {
@@ -172,7 +191,9 @@
         layout->addWidget(container);
     }
 
-    loadTree(url());
+    if (url().isValid()) {
+        loadTree(url());
+    }
     Panel::showEvent(event);
 }
 
@@ -303,9 +324,14 @@
     m_updateCurrentItem = false;
 
     QUrl baseUrl;
+    const QUrl homeUrl(QUrl::fromLocalFile(GeneralSettings::homeUrl()));
     if (url.isLocalFile()) {
-        // Use the root directory as base for local URLs (#150941)
-        baseUrl = QUrl::fromLocalFile(QDir::rootPath());
+        if (FoldersPanelSettings::limitFoldersPanelToHome() && (homeUrl.isParentOf(url) || homeUrl == url)) {
+            baseUrl = homeUrl;
+        } else {
+            // Use the root directory as base for local URLs (#150941)
+            baseUrl = QUrl::fromLocalFile(QDir::rootPath());
+        }
     } else {
         // Clear the path for non-local URLs and use it as base
         baseUrl = url;
@@ -323,16 +349,21 @@
     } else {
         m_updateCurrentItem = true;
         m_model->expandParentDirectories(url);
+
+        if (FoldersPanelSettings::limitFoldersPanelToHome() && homeUrl == url) {
+            KItemListSelectionManager* selectionManager = m_controller->selectionManager();
+            selectionManager->clearSelection();
+        }
         // slotLoadingCompleted() will be invoked after the model has
         // expanded the url
     }
 }
 
 void FoldersPanel::updateCurrentItem(int index)
 {
     KItemListSelectionManager* selectionManager = m_controller->selectionManager();
-    selectionManager->setCurrentItem(index);
     selectionManager->clearSelection();
+    selectionManager->setCurrentItem(index);
     selectionManager->setSelected(index);
 
     m_controller->view()->scrollToItem(index);
diff --git a/src/panels/folders/treeviewcontextmenu.h b/src/panels/folders/treeviewcontextmenu.h
--- a/src/panels/folders/treeviewcontextmenu.h
+++ b/src/panels/folders/treeviewcontextmenu.h
@@ -79,6 +79,12 @@
     void setShowHiddenFiles(bool show);
 
     /**
+     * Sets the 'Limit folders panel to home' setting for the
+     * folders panel to \a enable.
+     */
+    void setLimitFoldersPanelToHome(bool enable);
+
+    /**
      * Sets the 'Automatic Scrolling' setting for the
      * folders panel to \a enable.
      */
diff --git a/src/panels/folders/treeviewcontextmenu.cpp b/src/panels/folders/treeviewcontextmenu.cpp
--- a/src/panels/folders/treeviewcontextmenu.cpp
+++ b/src/panels/folders/treeviewcontextmenu.cpp
@@ -124,6 +124,13 @@
     popup->addAction(showHiddenFilesAction);
     connect(showHiddenFilesAction, &QAction::toggled, this, &TreeViewContextMenu::setShowHiddenFiles);
 
+    // insert 'Limit folders panel to home directory if inside home'
+    QAction* limitFoldersPanelToHomeAction = new QAction(i18nc("@action:inmenu", "Limit folders panel to home directory if inside home"), this);
+    limitFoldersPanelToHomeAction->setCheckable(true);
+    limitFoldersPanelToHomeAction->setChecked(m_parent->limitFoldersPanelToHome());
+    popup->addAction(limitFoldersPanelToHomeAction);
+    connect(limitFoldersPanelToHomeAction, &QAction::toggled, this, &TreeViewContextMenu::setLimitFoldersPanelToHome);
+
     // insert 'Automatic Scrolling'
     QAction* autoScrollingAction = new QAction(i18nc("@action:inmenu", "Automatic Scrolling"), this);
     autoScrollingAction->setCheckable(true);
@@ -229,6 +236,11 @@
     m_parent->setShowHiddenFiles(show);
 }
 
+void TreeViewContextMenu::setLimitFoldersPanelToHome(bool enable)
+{
+    m_parent->setLimitFoldersPanelToHome(enable);
+}
+
 void TreeViewContextMenu::setAutoScrolling(bool enable)
 {
     m_parent->setAutoScrolling(enable);
diff --git a/src/settings/dolphin_generalsettings.kcfg b/src/settings/dolphin_generalsettings.kcfg
--- a/src/settings/dolphin_generalsettings.kcfg
+++ b/src/settings/dolphin_generalsettings.kcfg
@@ -62,6 +62,10 @@
             <label>Rename inline</label>
             <default>true</default>
         </entry>
+        <entry name="LimitFolderPanelToHome" type="Bool">
+            <label>Limit folder panel to home directory if inside home</label>
+            <default>false</default>
+        </entry>
         <entry name="ShowSelectionToggle" type="Bool">
             <label>Show selection toggle</label>
             <default>true</default>
diff --git a/src/settings/general/behaviorsettingspage.h b/src/settings/general/behaviorsettingspage.h
--- a/src/settings/general/behaviorsettingspage.h
+++ b/src/settings/general/behaviorsettingspage.h
@@ -66,6 +66,7 @@
 
     QCheckBox* m_renameInline;
     QCheckBox* m_useTabForSplitViewSwitch;
+    QCheckBox* m_limitFolderPanelToHome;
 };
 
 #endif
diff --git a/src/settings/general/behaviorsettingspage.cpp b/src/settings/general/behaviorsettingspage.cpp
--- a/src/settings/general/behaviorsettingspage.cpp
+++ b/src/settings/general/behaviorsettingspage.cpp
@@ -42,7 +42,8 @@
     m_caseSensitiveSorting(0),
     m_caseInsensitiveSorting(0),
     m_renameInline(0),
-    m_useTabForSplitViewSwitch(0)
+    m_useTabForSplitViewSwitch(0),
+    m_limitFolderPanelToHome(0)
 {
     QVBoxLayout* topLayout = new QVBoxLayout(this);
 
@@ -82,12 +83,16 @@
     // 'Use tab for switching between right and left split'
     m_useTabForSplitViewSwitch = new QCheckBox(i18nc("option:check", "Use tab for switching between right and left split view"), this);
 
+    // 'Limit folder panel to home directory if inside home'
+    m_limitFolderPanelToHome = new QCheckBox(i18nc("option:check", "Limit folder panel to home directory if inside home"), this);
+
     topLayout->addWidget(viewPropsBox);
     topLayout->addWidget(sortingPropsBox);
     topLayout->addWidget(m_showToolTips);
     topLayout->addWidget(m_showSelectionToggle);
     topLayout->addWidget(m_renameInline);
     topLayout->addWidget(m_useTabForSplitViewSwitch);
+    topLayout->addWidget(m_limitFolderPanelToHome);
     topLayout->addStretch();
 
     loadSettings();
@@ -101,6 +106,7 @@
     connect(m_caseSensitiveSorting, &QRadioButton::toggled, this, &BehaviorSettingsPage::changed);
     connect(m_renameInline, &QCheckBox::toggled, this, &BehaviorSettingsPage::changed);
     connect(m_useTabForSplitViewSwitch, &QCheckBox::toggled, this, &BehaviorSettingsPage::changed);
+    connect(m_limitFolderPanelToHome, &QCheckBox::toggled, this, &BehaviorSettingsPage::changed);
 }
 
 BehaviorSettingsPage::~BehaviorSettingsPage()
@@ -119,6 +125,7 @@
     setSortingChoiceValue(settings);
     settings->setRenameInline(m_renameInline->isChecked());
     settings->setUseTabForSwitchingSplitView(m_useTabForSplitViewSwitch->isChecked());
+    settings->setLimitFolderPanelToHome(m_limitFolderPanelToHome->isChecked());
     settings->save();
 
     if (useGlobalViewProps) {
@@ -149,6 +156,7 @@
     m_showSelectionToggle->setChecked(GeneralSettings::showSelectionToggle());
     m_renameInline->setChecked(GeneralSettings::renameInline());
     m_useTabForSplitViewSwitch->setChecked(GeneralSettings::useTabForSwitchingSplitView());
+    m_limitFolderPanelToHome->setChecked(GeneralSettings::limitFolderPanelToHome());
 
     loadSortingChoiceSettings();
 }