An MTJ in an MRAM array or TMR read head is disclosed in which a low magnetization capping layer is a composite having a NiFeHf inner layer formed on a NiFe or CoFeB/NiFe free layer, a Ta middle layer, and a Ru outer layer on the Ta layer. For example, a low magnetization NiFeHf layer is achieved by co-sputtering NiFe and Hf targets with a forward power of 400 W and 200 W, respectively. A higher Hf content increases the oxygen gettering power of the NiFeHf layer and the thickness is modified to change dR/R, RA, and magnetostriction values. A so-called dead layer between the free layer and capping layer is restored by incorporating a NiFeHf layer on the free layer to improve lattice matching. The Fe content in the NiFe target used to make the NiFeHf layer is preferably the same as in the NiFe free layer.