diff --git a/sweep/fee_bumper.go b/sweep/fee_bumper.go
index b081fe479..99360d6fb 100644
--- a/sweep/fee_bumper.go
+++ b/sweep/fee_bumper.go
@@ -1114,6 +1114,14 @@ func (t *TxPublisher) handleInitialTxError(r *monitorRecord, err error) {
 	case errors.Is(err, ErrZeroFeeRateDelta):
 		result.Event = TxFailed
 
+	// When the error is due to not enough inputs to cover the budget, we'll
+	// send a TxFailed event so these inputs can be retried when the wallet
+	// has more UTXOs.
+	case errors.Is(err, ErrNotEnoughInputs),
+		errors.Is(err, ErrNotEnoughBudget):
+
+		result.Event = TxFailed
+
 	// When there are missing inputs, we'll create a TxUnknownSpend bump
 	// result here so the rest of the inputs can be retried.
 	case errors.Is(err, ErrInputMissing):
@@ -1757,9 +1765,11 @@ func prepareSweepTx(inputs []input.Input, changePkScript lnwallet.AddrWithKey,
 
 	// Make sure total output amount is less than total input amount.
 	if requiredOutput+txFee > totalInput {
-		return 0, noChange, noLocktime, fmt.Errorf("insufficient "+
-			"input to create sweep tx: input_sum=%v, "+
-			"output_sum=%v", totalInput, requiredOutput+txFee)
+		log.Errorf("Insufficient input to create sweep tx: "+
+			"input_sum=%v, output_sum=%v", totalInput,
+			requiredOutput+txFee)
+
+		return 0, noChange, noLocktime, ErrNotEnoughInputs
 	}
 
 	// The value remaining after the required output and fees is the
diff --git a/sweep/tx_input_set.go b/sweep/tx_input_set.go
index ff3b7f309..db4b893ed 100644
--- a/sweep/tx_input_set.go
+++ b/sweep/tx_input_set.go
@@ -296,7 +296,9 @@ func (b *BudgetInputSet) NeedWalletInput() bool {
 		}
 
 		// Get the amount left after covering the input's own budget.
-		// This amount can then be lent to the above input.
+		// This amount can then be lent to the above input. For a wallet
+		// input, its `Budget` is set to zero, which means the whole
+		// input can be borrowed to cover the budget.
 		budget := inp.params.Budget
 		output := btcutil.Amount(inp.SignDesc().Output.Value)
 		budgetBorrowable += output - budget
@@ -350,7 +352,7 @@ func (b *BudgetInputSet) AddWalletInputs(wallet Wallet) error {
 
 	// Exit early if there are no wallet UTXOs.
 	if len(utxos) == 0 {
-		return ErrNotEnoughInputs
+		return fmt.Errorf("%w: empty wallet", ErrNotEnoughInputs)
 	}
 
 	// Sort the UTXOs by putting smaller values at the start of the slice
@@ -362,11 +364,6 @@ func (b *BudgetInputSet) AddWalletInputs(wallet Wallet) error {
 		return utxos[i].Value < utxos[j].Value
 	})
 
-	// Make a copy of the current inputs. If the wallet doesn't have enough
-	// utxos to cover the budget, we will revert the current set to its
-	// original state by removing the added wallet inputs.
-	originalInputs := b.copyInputs()
-
 	// Add wallet inputs to the set until the specified budget is covered.
 	for _, utxo := range utxos {
 		err := b.addWalletInput(utxo)
@@ -380,11 +377,10 @@ func (b *BudgetInputSet) AddWalletInputs(wallet Wallet) error {
 		}
 	}
 
-	// The wallet doesn't have enough utxos to cover the budget. Revert the
-	// input set to its original state.
-	b.inputs = originalInputs
+	log.Warn("Not enough wallet UTXOs to cover the budget, sweeping " +
+		"anyway...")
 
-	return ErrNotEnoughInputs
+	return nil
 }
 
 // Budget returns the total budget of the set.
diff --git a/sweep/tx_input_set_test.go b/sweep/tx_input_set_test.go
index 0ea056e49..6e91a3fb1 100644
--- a/sweep/tx_input_set_test.go
+++ b/sweep/tx_input_set_test.go
@@ -386,12 +386,12 @@ func TestNeedWalletInput(t *testing.T) {
 	}
 }
 
-// TestAddWalletInputReturnErr tests the three possible errors returned from
+// TestAddWalletInputsReturnErr tests the three possible errors returned from
 // AddWalletInputs:
 // - error from ListUnspentWitnessFromDefaultAccount.
 // - error from createWalletTxInput.
 // - error when wallet doesn't have utxos.
-func TestAddWalletInputReturnErr(t *testing.T) {
+func TestAddWalletInputsReturnErr(t *testing.T) {
 	t.Parallel()
 
 	wallet := &MockWallet{}
@@ -436,10 +436,9 @@ func TestAddWalletInputReturnErr(t *testing.T) {
 	require.ErrorIs(t, err, ErrNotEnoughInputs)
 }
 
-// TestAddWalletInputNotEnoughInputs checks that when there are not enough
-// wallet utxos, an error is returned and the budget set is reset to its
-// initial state.
-func TestAddWalletInputNotEnoughInputs(t *testing.T) {
+// TestAddWalletInputsNotEnoughInputs checks that when there are not enough
+// wallet utxos, no error is returned as long as the wallet is not empty.
+func TestAddWalletInputsNotEnoughInputs(t *testing.T) {
 	t.Parallel()
 
 	wallet := &MockWallet{}
@@ -476,19 +475,18 @@ func TestAddWalletInputNotEnoughInputs(t *testing.T) {
 	// Initialize an input set with the pending input.
 	set := BudgetInputSet{inputs: []*SweeperInput{pi}}
 
-	// Add wallet inputs to the input set, which should give us an error as
-	// the wallet cannot cover the budget.
+	// Add wallet inputs to the input set, which should return no error
+	// although the wallet cannot cover the budget.
 	err := set.AddWalletInputs(wallet)
-	require.ErrorIs(t, err, ErrNotEnoughInputs)
+	require.NoError(t, err)
 
-	// Check that the budget set is reverted to its initial state.
-	require.Len(t, set.inputs, 1)
-	require.Equal(t, pi, set.inputs[0])
+	// Check that the budget set is updated.
+	require.Len(t, set.inputs, 2)
 }
 
-// TestAddWalletInputSuccess checks that when there are enough wallet utxos,
+// TestAddWalletInputsSuccess checks that when there are enough wallet utxos,
 // they are added to the input set.
-func TestAddWalletInputSuccess(t *testing.T) {
+func TestAddWalletInputsSuccess(t *testing.T) {
 	t.Parallel()
 
 	wallet := &MockWallet{}