diff --git a/loose.c b/loose.c
index e97c3bb50a..aa3cb1b4fc 100644
--- a/loose.c
+++ b/loose.c
@@ -61,12 +61,17 @@ static int insert_loose_map(struct odb_source_loose *loose,
 	return inserted;
 }
 
-static int load_one_loose_object_map(struct repository *repo, struct odb_source_loose *loose)
+int loose_object_map_load(struct odb_source_loose *loose)
 {
-	struct strbuf buf = STRBUF_INIT, path = STRBUF_INIT;
+	struct repository *repo = loose->base.odb->repo;
+	struct strbuf buf = STRBUF_INIT;
+	char *path;
 	FILE *fp;
 	int ret = -1;
 
+	if (!should_use_loose_object_map(repo))
+		return 0;
+
 	if (!loose->map)
 		loose_object_map_init(&loose->map);
 	if (!loose->cache) {
@@ -78,10 +83,10 @@ static int load_one_loose_object_map(struct repository *repo, struct odb_source_
 	insert_loose_map(loose, repo->hash_algo->empty_blob, repo->compat_hash_algo->empty_blob);
 	insert_loose_map(loose, repo->hash_algo->null_oid, repo->compat_hash_algo->null_oid);
 
-	repo_common_path_replace(repo, &path, "objects/loose-object-idx");
-	fp = fopen(path.buf, "rb");
+	path = xstrfmt("%s/loose-object-idx", loose->base.path);
+	fp = fopen(path, "rb");
 	if (!fp) {
-		strbuf_release(&path);
+		free(path);
 		return 0;
 	}
 
@@ -102,7 +107,7 @@ static int load_one_loose_object_map(struct repository *repo, struct odb_source_
 err:
 	fclose(fp);
 	strbuf_release(&buf);
-	strbuf_release(&path);
+	free(path);
 	return ret;
 }
 
@@ -110,17 +115,13 @@ int repo_read_loose_object_map(struct repository *repo)
 {
 	struct odb_source *source;
 
-	if (!should_use_loose_object_map(repo))
-		return 0;
-
 	odb_prepare_alternates(repo->objects);
-
 	for (source = repo->objects->sources; source; source = source->next) {
 		struct odb_source_files *files = odb_source_files_downcast(source);
-		if (load_one_loose_object_map(repo, files->loose) < 0) {
+		if (loose_object_map_load(files->loose) < 0)
 			return -1;
-		}
 	}
+
 	return 0;
 }
 
diff --git a/loose.h b/loose.h
index 6c9b3f4571..ed663ac550 100644
--- a/loose.h
+++ b/loose.h
@@ -13,6 +13,7 @@ struct loose_object_map {
 
 void loose_object_map_init(struct loose_object_map **map);
 void loose_object_map_clear(struct loose_object_map **map);
+int loose_object_map_load(struct odb_source_loose *loose);
 int repo_loose_object_map_oid(struct repository *repo,
 			      const struct object_id *src,
 			      const struct git_hash_algo *dest_algo,
diff --git a/odb/source-files.c b/odb/source-files.c
index 5a68af7d84..4f8e7ad7e3 100644
--- a/odb/source-files.c
+++ b/odb/source-files.c
@@ -51,6 +51,23 @@ static void odb_source_files_close(struct odb_source *source)
 	odb_source_close(&files->packed->base);
 }
 
+static int odb_source_files_create_on_disk(struct odb_source *source)
+{
+	struct strbuf path = STRBUF_INIT;
+
+	safe_create_dir(source->odb->repo, source->path, 1);
+
+	strbuf_addf(&path, "%s/pack", source->path);
+	safe_create_dir(source->odb->repo, path.buf, 1);
+
+	strbuf_reset(&path);
+	strbuf_addf(&path, "%s/info", source->path);
+	safe_create_dir(source->odb->repo, path.buf, 1);
+
+	strbuf_release(&path);
+	return 0;
+}
+
 static void odb_source_files_prepare(struct odb_source *source,
 				     enum odb_prepare_flags flags)
 {
@@ -742,6 +759,7 @@ struct odb_source_files *odb_source_files_new(struct object_database *odb,
 
 	files->base.free = odb_source_files_free;
 	files->base.close = odb_source_files_close;
+	files->base.create_on_disk = odb_source_files_create_on_disk;
 	files->base.prepare = odb_source_files_prepare;
 	files->base.read_object_info = odb_source_files_read_object_info;
 	files->base.read_object_stream = odb_source_files_read_object_stream;
diff --git a/odb/source-files.h b/odb/source-files.h
index 044242bc36..9630b5f962 100644
--- a/odb/source-files.h
+++ b/odb/source-files.h
@@ -43,7 +43,9 @@ bool odb_source_files_optimize_required(struct odb_source *source,
 static inline struct odb_source_files *odb_source_files_downcast(struct odb_source *source)
 {
 	if (source->type != ODB_SOURCE_FILES)
-		BUG("trying to downcast source of type '%d' to files", source->type);
+		BUG("trying to downcast source of type '%s' to '%s'",
+		    odb_source_type_to_name(source->type),
+		    odb_source_type_to_name(ODB_SOURCE_FILES));
 	return container_of(source, struct odb_source_files, base);
 }
 
diff --git a/odb/source-inmemory.h b/odb/source-inmemory.h
index a88fc2e320..adbad23e8b 100644
--- a/odb/source-inmemory.h
+++ b/odb/source-inmemory.h
@@ -26,7 +26,9 @@ struct odb_source_inmemory *odb_source_inmemory_new(struct object_database *odb)
 static inline struct odb_source_inmemory *odb_source_inmemory_downcast(struct odb_source *source)
 {
 	if (source->type != ODB_SOURCE_INMEMORY)
-		BUG("trying to downcast source of type '%d' to in-memory", source->type);
+		BUG("trying to downcast source of type '%s' to '%s'",
+		    odb_source_type_to_name(source->type),
+		    odb_source_type_to_name(ODB_SOURCE_INMEMORY));
 	return container_of(source, struct odb_source_inmemory, base);
 }
 
diff --git a/odb/source-loose.c b/odb/source-loose.c
index ef0e919277..a292eb7efc 100644
--- a/odb/source-loose.c
+++ b/odb/source-loose.c
@@ -1055,5 +1055,7 @@ struct odb_source_loose *odb_source_loose_new(struct object_database *odb,
 	if (!is_absolute_path(loose->base.path))
 		chdir_notify_register(NULL, odb_source_loose_reparent, loose);
 
+	loose_object_map_load(loose);
+
 	return loose;
 }
diff --git a/odb/source-loose.h b/odb/source-loose.h
index 6070aaf3ce..3cf2e1f8f1 100644
--- a/odb/source-loose.h
+++ b/odb/source-loose.h
@@ -41,7 +41,9 @@ struct odb_source_loose *odb_source_loose_new(struct object_database *odb,
 static inline struct odb_source_loose *odb_source_loose_downcast(struct odb_source *source)
 {
 	if (source->type != ODB_SOURCE_LOOSE)
-		BUG("trying to downcast source of type '%d' to loose", source->type);
+		BUG("trying to downcast source of type '%s' to '%s'",
+		    odb_source_type_to_name(source->type),
+		    odb_source_type_to_name(ODB_SOURCE_LOOSE));
 	return container_of(source, struct odb_source_loose, base);
 }
 
diff --git a/odb/source-packed.h b/odb/source-packed.h
index 77309ddd09..a0f6b5096d 100644
--- a/odb/source-packed.h
+++ b/odb/source-packed.h
@@ -78,7 +78,9 @@ struct odb_source_packed *odb_source_packed_new(struct object_database *odb,
 static inline struct odb_source_packed *odb_source_packed_downcast(struct odb_source *source)
 {
 	if (source->type != ODB_SOURCE_PACKED)
-		BUG("trying to downcast source of type '%d' to packed", source->type);
+		BUG("trying to downcast source of type '%s' to '%s'",
+		    odb_source_type_to_name(source->type),
+		    odb_source_type_to_name(ODB_SOURCE_PACKED));
 	return container_of(source, struct odb_source_packed, base);
 }
 
diff --git a/odb/source.c b/odb/source.c
index 7993dcbd65..c300e836f6 100644
--- a/odb/source.c
+++ b/odb/source.c
@@ -4,6 +4,25 @@
 #include "odb/source.h"
 #include "packfile.h"
 
+static const char * const odb_source_names_by_type[] = {
+	[ODB_SOURCE_UNKNOWN] = "unknown",
+	[ODB_SOURCE_FILES] = "files",
+	[ODB_SOURCE_LOOSE] = "loose",
+	[ODB_SOURCE_PACKED] = "packed",
+	[ODB_SOURCE_INMEMORY] = "inmemory",
+};
+
+const char *odb_source_type_to_name(enum odb_source_type type)
+{
+	const char *name;
+	if (type < 0 || type >= ARRAY_SIZE(odb_source_names_by_type))
+		type = ODB_SOURCE_UNKNOWN;
+	name = odb_source_names_by_type[type];
+	if (!name)
+		BUG("name missing in `odb_source_names_by_type` for '%d'", type);
+	return name;
+}
+
 struct odb_source *odb_source_new(struct object_database *odb,
 				  const char *path,
 				  bool local)
diff --git a/odb/source.h b/odb/source.h
index d69f8e2d1c..4bc037b8d6 100644
--- a/odb/source.h
+++ b/odb/source.h
@@ -25,6 +25,12 @@ enum odb_source_type {
 	ODB_SOURCE_INMEMORY,
 };
 
+/*
+ * Convert between the enum and its name. Returns the equivalent of "unknown"
+ * for unknown types.
+ */
+const char *odb_source_type_to_name(enum odb_source_type type);
+
 struct object_id;
 struct odb_read_stream;
 struct strvec;
@@ -83,6 +89,18 @@ struct odb_source {
 	 */
 	void (*close)(struct odb_source *source);
 
+	/*
+	 * This callback is expected to create on-disk data structures that are
+	 * required for this source to operate.
+	 *
+	 * The callback is expected to return 0 on success, a negative error
+	 * code otherwise.
+	 *
+	 * This callback may be NULL in case the source does not need any
+	 * on-disk setup.
+	 */
+	int (*create_on_disk)(struct odb_source *source);
+
 	/*
 	 * This callback is expected to prepare the source so that it becomes
 	 * ready for use. It optionally clears underlying caches of the object
@@ -327,6 +345,17 @@ static inline void odb_source_close(struct odb_source *source)
 	source->close(source);
 }
 
+/*
+ * Create on-disk data structures that are required for this source to operate
+ * correctly. Returns 0 on success, a negative error code otherwise.
+ */
+static inline int odb_source_create_on_disk(struct odb_source *source)
+{
+	if (!source->create_on_disk)
+		return 0;
+	return source->create_on_disk(source);
+}
+
 /*
  * Prepare the object database source and clear any caches. Depending on the
  * backend used this may have the effect that concurrently-written objects
diff --git a/repository.c b/repository.c
index 651b0f6933..2c27591b1c 100644
--- a/repository.c
+++ b/repository.c
@@ -201,8 +201,6 @@ void repo_set_compat_hash_algo(struct repository *repo MAYBE_UNUSED, uint32_t al
 	if (hash_algo_by_ptr(repo->hash_algo) == algo)
 		BUG("hash_algo and compat_hash_algo match");
 	repo->compat_hash_algo = algo ? &hash_algos[algo] : NULL;
-	if (repo->compat_hash_algo)
-		repo_read_loose_object_map(repo);
 #else
 	if (algo)
 		die(_("compatibility hash algorithm support requires Rust"));
diff --git a/setup.c b/setup.c
index 95909e9603..c6b05ea4aa 100644
--- a/setup.c
+++ b/setup.c
@@ -1760,6 +1760,13 @@ enum discovery_result discover_git_directory_reason(struct strbuf *commondir,
 	return result;
 }
 
+static void get_object_directories(char **object_directory,
+				   char **alternate_object_directories)
+{
+	*object_directory = xstrdup_or_null(getenv(DB_ENVIRONMENT));
+	*alternate_object_directories = xstrdup_or_null(getenv(ALTERNATE_DB_ENVIRONMENT));
+}
+
 int apply_repository_format(struct repository *repo,
 			    const struct repository_format *format,
 			    enum apply_repository_format_flags flags,
@@ -1779,8 +1786,9 @@ int apply_repository_format(struct repository *repo,
 	if (flags & APPLY_REPOSITORY_FORMAT_HONOR_ENV) {
 		const char *shallow_file;
 
-		object_directory = xstrdup_or_null(getenv(DB_ENVIRONMENT));
-		alternate_object_directories = xstrdup_or_null(getenv(ALTERNATE_DB_ENVIRONMENT));
+		get_object_directories(&object_directory,
+				       &alternate_object_directories);
+
 		shallow_file = getenv(GIT_SHALLOW_FILE_ENVIRONMENT);
 		if (shallow_file)
 			set_alternate_shallow_file(repo, shallow_file);
@@ -1788,8 +1796,6 @@ int apply_repository_format(struct repository *repo,
 
 	repo->bare_cfg = format->is_bare;
 	repo_set_hash_algo(repo, format->hash_algo);
-	repo->objects = odb_new(repo, object_directory,
-				alternate_object_directories);
 	repo_set_compat_hash_algo(repo, format->compat_hash_algo);
 	repo_set_ref_storage_format(repo,
 				    format->ref_storage_format,
@@ -1805,6 +1811,10 @@ int apply_repository_format(struct repository *repo,
 	repo->repository_format_precious_objects =
 		format->precious_objects;
 
+	if (!(flags & APPLY_REPOSITORY_FORMAT_SKIP_ODB_CREATION))
+		repo->objects = odb_new(repo, object_directory,
+					alternate_object_directories);
+
 	free(alternate_object_directories);
 	free(object_directory);
 	return 0;
@@ -2653,25 +2663,37 @@ static int create_default_files(struct repository *repo,
 	return reinit;
 }
 
-static void create_object_directory(struct repository *repo)
+static void create_object_database(struct repository *repo)
 {
-	struct strbuf path = STRBUF_INIT;
-	size_t baselen;
+	char *object_directory, *alternate_object_directories;
 
-	strbuf_addstr(&path, repo_get_object_directory(repo));
-	baselen = path.len;
+	get_object_directories(&object_directory, &alternate_object_directories);
 
-	safe_create_dir(repo, path.buf, 1);
+	/*
+	 * Create the "objects" directory in the common directory. This is done
+	 * so that the repository can be discovered regardless of the backend
+	 * used.
+	 *
+	 * Note that we only do this in case the object directory wasn't
+	 * overwritten via an environment variable. If it _is_ being overridden
+	 * then we skip this step, as the repository won't be discoverable
+	 * anyway without the environment variable.
+	 */
+	if (!object_directory) {
+		struct strbuf objects_dir = STRBUF_INIT;
+		repo_common_path_append(repo, &objects_dir, "objects");
+		safe_create_dir(repo, objects_dir.buf, 1);
+		strbuf_release(&objects_dir);
+	}
 
-	strbuf_setlen(&path, baselen);
-	strbuf_addstr(&path, "/pack");
-	safe_create_dir(repo, path.buf, 1);
+	repo->objects = odb_new(repo, object_directory,
+				alternate_object_directories);
 
-	strbuf_setlen(&path, baselen);
-	strbuf_addstr(&path, "/info");
-	safe_create_dir(repo, path.buf, 1);
+	if (odb_source_create_on_disk(repo->objects->sources) < 0)
+		die("failed creating object database");
 
-	strbuf_release(&path);
+	free(alternate_object_directories);
+	free(object_directory);
 }
 
 static void separate_git_dir(struct repository *repo,
@@ -2867,9 +2889,10 @@ int init_db(struct repository *repo,
 	 */
 	read_and_verify_repository_format(&repo_fmt, repo_get_git_dir(repo), NULL);
 	repository_format_configure(&repo_fmt, hash, ref_storage_format);
-	if (apply_repository_format(repo, &repo_fmt, APPLY_REPOSITORY_FORMAT_HONOR_ENV, &err) < 0)
+	if (apply_repository_format(repo, &repo_fmt,
+				    APPLY_REPOSITORY_FORMAT_HONOR_ENV |
+				    APPLY_REPOSITORY_FORMAT_SKIP_ODB_CREATION, &err) < 0)
 		die("%s", err.buf);
-	startup_info->have_repository = 1;
 
 	/*
 	 * Ensure `core.hidedotfiles` is processed. This must happen after we
@@ -2885,7 +2908,9 @@ int init_db(struct repository *repo,
 
 	if (!(flags & INIT_DB_SKIP_REFDB))
 		create_reference_database(repo, initial_branch, flags & INIT_DB_QUIET);
-	create_object_directory(repo);
+	create_object_database(repo);
+
+	startup_info->have_repository = 1;
 
 	if (repo_settings_get_shared_repository(repo)) {
 		char buf[10];
diff --git a/setup.h b/setup.h
index 654f10e059..e55d647b70 100644
--- a/setup.h
+++ b/setup.h
@@ -241,6 +241,15 @@ enum apply_repository_format_flags {
 	 * relate to the object database.
 	 */
 	APPLY_REPOSITORY_FORMAT_HONOR_ENV = (1 << 0),
+
+	/*
+	 * Usually, the object database is created after the repository format
+	 * was applied. This step is skipped if this flag is set, which leaves
+	 * us with a partially-working repository.
+	 *
+	 * This is useful when initializing a new repository.
+	 */
+	APPLY_REPOSITORY_FORMAT_SKIP_ODB_CREATION = (1 << 1),
 };
 
 /*