For anyone who has this same problem, this is the code I used in the .env.local.php file:

$dbCreds = [

    'DB_NAME' => '', //Your db name for this project
    // Don't change these here - override in app/config/local/database.php
    'DB_HOST' => 'localhost',
    'DB_USERNAME' => 'homestead',
    'DB_PASSWORD' => 'secret',
];

# On the command line, we don't always have access to the values set in the Homestead.yaml
foreach ($dbCreds as $k => $v)
{
    // If there is already an env set, then remove the default above
    if (getenv($k)) unset($dbCreds[$k]);
}

return $dbCreds;

Please feel free to criticise/ridicule if you have a better way!