diff --git a/homeassistant/__init__.py b/homeassistant/__init__.py
index 39980937bc0..7b836af8d05 100644
--- a/homeassistant/__init__.py
+++ b/homeassistant/__init__.py
@@ -63,7 +63,7 @@ class HomeAssistant(object):
         self.services = ServiceRegistry(self.bus, pool)
         self.states = StateMachine(self.bus)
 
-        self.config_dir = os.getcwd()
+        self.config_dir = os.path.join(os.getcwd(), 'config')
 
     def get_config_path(self, path):
         """ Returns path to the file within the config dir. """
diff --git a/test/test_core.py b/test/test_core.py
index 1bb08365380..91a56df14fa 100644
--- a/test/test_core.py
+++ b/test/test_core.py
@@ -34,9 +34,10 @@ class TestHomeAssistant(unittest.TestCase):
 
     def test_get_config_path(self):
         """ Test get_config_path method. """
-        self.assertEqual(os.getcwd(), self.hass.config_dir)
+        self.assertEqual(os.path.join(os.getcwd(), "config"),
+                         self.hass.config_dir)
 
-        self.assertEqual(os.path.join(os.getcwd(), "test.conf"),
+        self.assertEqual(os.path.join(os.getcwd(), "config", "test.conf"),
                          self.hass.get_config_path("test.conf"))
 
     def test_block_till_stoped(self):