You need to test permissions with the command I recommended, if it does not report permission denied, then it is fine, at least for serving files.
To the minimum, user "nobody" needs read permission to the target directory. So, usually permissions for /home/user1 can be set to "0755", which means everyone can ready files there.
For better security, you can do as following.
Let each user has its private group, 'user1' has its own group 'group1', '/home/user1' is owned by 'user1/group1', set permission of "/home/user1" to "0750" or "0770" with command like "chmod 0750 /home/user1", so this directory is not world readable. Then add "nobody" user to "group1" by editing "/etc/group" file, this way, nobody user will have at least read permission to '/home/user1'.
Do not use symbolic link, just pointing to the target directory directly.