It will be as secure as your Web server configuration and your Web application, just like it would be were it deployed on a "real" Web server. If the Web server is running as the www-data user, you could change your home directory permissions to something that the www-data user cannot read:
chmod 750 .
Run that while logged in as your own username. The rest cannot be guessed without lots information from you including the Web application itself. But, at least this much may offer a little more peace of mind knowing your files in your home directory will not be read.
Add another layer by creating a .htaccess file in the DOCUMENT_ROOT (/var/www/ ?) so that anyone who access the Web server will need to supply a username and password first. This could always be removed at deployment time.
Assuming you are using Apache... edit your Apache config file to make sure that any AuthConfig directives you add will work. Within the 'Directory' directive that specifies your document root, make sure you have AuthConfig in your AllowOverride statement:
Or, you could use "All":
This lets us put Apache directives in .htaccess files. Now create a password file somewhere outside the public portion of the Web site. Here I create (-c) a password file named passwords in /usr/local/etc/apache/ with the initial user, my_username. It will prompt for password.
sudo mkdir -p /usr/local/etc/apache/
sudo htpasswd -c /usr/local/etc/apache/passwords my_username
Then put some Apache AuthConfig directives in the document root. If the document root is /var/www/, then use your favorite editor to create a new file name .htaccess...
sudo vim /var/www/.htaccess
The contents of that file ...
AuthName "My Web App"
Require user my_username
Save. Change owner and permissions, if running as www-data:
sudo chown www-data /var/www/.htaccess
sudo chmod 400 /var/www/.htaccess
Now no one can use the Web server without username and password, plus the Web server cannot read your personal files. I do not know how or if this password method could work, though, when PayPal is redirecting back to you.
I suppose you could move the .htaccess in and out of the /var/www directory as needed while you are developing the PayPal return portion of your Web app.