diff --git a/docs/modeling-app/fresh-installation.md b/docs/modeling-app/fresh-installation.md
index 498a56f9b..1b7464e31 100644
--- a/docs/modeling-app/fresh-installation.md
+++ b/docs/modeling-app/fresh-installation.md
@@ -34,7 +34,17 @@ git checkout [VERSION] #Replace with your desired version, e.g. v1.0.18
 
 For latest release go to: [https://github.com/dhis2-chap/chap-core/releases](https://github.com/dhis2-chap/chap-core/releases)
 
-## 3. Start Chap Core
+## 3. Configure Environment Variables
+
+Copy the example environment file:
+
+```console
+cp .env.example .env
+```
+
+This creates a `.env` file with default database credentials used by Docker Compose. For production deployments, edit `.env` to set secure values for `POSTGRES_USER`, `POSTGRES_PASSWORD`, and `POSTGRES_DB`.
+
+## 4. Start Chap Core
 
 ```console
 docker compose up
@@ -51,7 +61,7 @@ This single command will:
 
 The Chap Core REST API will be available at `http://localhost:8000` once all services are running.
 
-## 4. Verify the Installation
+## 5. Verify the Installation
 
 You can verify that Chap Core is running correctly by: