diff --git a/src/wallet/spend.cpp b/src/wallet/spend.cpp
index 7b26cf15bd3..ea70287f3f7 100644
--- a/src/wallet/spend.cpp
+++ b/src/wallet/spend.cpp
@@ -1161,7 +1161,19 @@ static util::Result<CreatedTransactionResult> CreateTransactionInternal(
     if (!select_coins_res) {
         // 'SelectCoins' either returns a specific error message or, if empty, means a general "Insufficient funds".
         const bilingual_str& err = util::ErrorString(select_coins_res);
-        return util::Error{err.empty() ?_("Insufficient funds") : err};
+        if (!err.empty()) return util::Error{err};
+
+        // Check if we have enough balance but cannot cover the fees
+        CAmount available_balance = preset_inputs.total_amount + available_coins.GetTotalAmount();
+        if (available_balance >= recipients_sum) {
+            CAmount available_effective_balance = preset_inputs.total_amount + available_coins.GetEffectiveTotalAmount().value_or(available_coins.GetTotalAmount());
+            if (available_effective_balance < selection_target) {
+                return util::Error{_("The total transaction amount exceeds your balance when fees are included")};
+            }
+        }
+
+        // General failure description
+        return util::Error{_("Insufficient funds")};
     }
     const SelectionResult& result = *select_coins_res;
     TRACEPOINT(coin_selection, selected_coins,
diff --git a/test/functional/wallet_fundrawtransaction.py b/test/functional/wallet_fundrawtransaction.py
index 827f27b431c..e6a8f7507d3 100755
--- a/test/functional/wallet_fundrawtransaction.py
+++ b/test/functional/wallet_fundrawtransaction.py
@@ -151,6 +151,7 @@ class RawTransactionsTest(BitcoinTestFramework):
         self.test_feerate_rounding()
         self.test_input_confs_control()
         self.test_duplicate_outputs()
+        self.test_cannot_cover_fees()
 
     def test_duplicate_outputs(self):
         self.log.info("Test deserializing and funding a transaction with duplicate outputs")
@@ -1459,7 +1460,8 @@ class RawTransactionsTest(BitcoinTestFramework):
         # To test this does not happen, we subtract 202 sats from the input value. If working correctly, this should
         # fail with insufficient funds rather than bitcoind asserting.
         rawtx = w.createrawtransaction(inputs=[], outputs=[{self.nodes[0].getnewaddress(address_type="bech32"): 1 - 0.00000202}])
-        assert_raises_rpc_error(-4, "Insufficient funds", w.fundrawtransaction, rawtx, fee_rate=1.85)
+        expected_err_msg = "The total transaction amount exceeds your balance when fees are included"
+        assert_raises_rpc_error(-4, expected_err_msg, w.fundrawtransaction, rawtx, fee_rate=1.85)
 
     def test_input_confs_control(self):
         self.nodes[0].createwallet("minconf")
@@ -1522,5 +1524,20 @@ class RawTransactionsTest(BitcoinTestFramework):
 
         wallet.unloadwallet()
 
+    def test_cannot_cover_fees(self):
+        self.log.info("Test tx amount exceeds available balance when fees are included")
+
+        self.nodes[1].createwallet("cannot_cover_fees")
+        wallet = self.nodes[1].get_wallet_rpc("cannot_cover_fees")
+
+        self.nodes[0].sendtoaddress(wallet.getnewaddress(), 0.3)
+        self.generate(self.nodes[0], 1)
+
+        rawtx = wallet.createrawtransaction(inputs=[], outputs=[{self.nodes[0].getnewaddress(): 0.3}])
+        expected_err_msg = "The total transaction amount exceeds your balance when fees are included"
+        assert_raises_rpc_error(-4, expected_err_msg, wallet.fundrawtransaction, rawtx)
+        wallet.unloadwallet()
+
+
 if __name__ == '__main__':
     RawTransactionsTest(__file__).main()