Materials with high magnetoelectric coupling are attractive for use in engineered multiferroic heterostructures with applications such as ultra-low power magnetic sensors, parametric inductors, and non-volatile random-access memory devices. Iron–cobalt alloys exhibit both high magnetostriction and high saturation magnetization that are required for achieving significantly higher magnetoelectric coupling. We report on sputter-deposited (Fe0.5Co0.5)1−xHfx (x = 0 – 0.14) alloy thin films and the beneficial influence of Hafnium alloying on the magnetic and magnetostrictive properties. We found that co-sputtering Hf results in the realization of the peening mechanism that drives film stress from highly tensile to slightly compressive. Scanning electron microscopy and x-ray diffraction along with vibrating sample magnetometry show reduction in coercivity with Hf alloying that is correlated with reduced grain size and low film stress. We demonstrate a crossover from tensile to compressive stress at x ∼ 0.09 while maintaining a high magnetostriction of 50 ppm and a low coercive field of 1.1 Oe. These characteristics appear to be related to the amorphous nature of the film at higher Hf alloying.