A tunneling magnetoresistive (TMR) read head has a read gap with a reduced thickness. A multilayer seed layer includes a first ferromagnetic seed layer on the lower shield, a ferromagnetic NiFe alloy on the first seed layer, and a third seed layer of Ru or Pt on the NiFe seed layer. The first and NiFe seed layers are magnetically part of the lower shield, thereby effectively reducing the read gap thickness. A free layer/capping layer structure includes a multilayer ferromagnetic free layer and a Hf capping layer on the free layer. The free layer includes a B-containing upper layer in contact with the Hf capping layer prior to annealing. When the sensor is annealed Hf diffuses into the B-containing upper layer, forming an interface layer. The Hf-containing interface layer possesses negative magnetostriction, so the free layer is not required to contain NiFe.