diff --git a/lib/shelley/src/Cardano/Wallet/Shelley/Transaction.hs b/lib/shelley/src/Cardano/Wallet/Shelley/Transaction.hs
index 3a196e24fa8..a211fb0b66c 100644
--- a/lib/shelley/src/Cardano/Wallet/Shelley/Transaction.hs
+++ b/lib/shelley/src/Cardano/Wallet/Shelley/Transaction.hs
@@ -310,16 +310,21 @@ _estimateMaxNumberOfInputs
     -> Word8
     -- ^ Number of outputs in transaction
     -> Word8
-_estimateMaxNumberOfInputs networkId (Quantity maxSize) md nOuts =
-    findMax minBound
+_estimateMaxNumberOfInputs networkId txMaxSize md nOuts =
+    findLargestUntil ((> maxSize) . txSizeGivenInputs) 0
   where
-    findMax :: Word8 -> Word8
-    findMax inf
-        | inf == maxBound    = 0
-        | isTooBig (inf + 1) = inf
-        | otherwise          = findMax (inf + 1)
-
-    isTooBig nInps = size > fromIntegral maxSize
+    -- | Find the largest amount of inputs that doesn't make the tx too big.
+    -- Tries in sequence from 0 and upward (up to 255, but smaller than 50 in
+    -- practice because of the max transaction size).
+    findLargestUntil :: (Word8 -> Bool) -> Word8 -> Word8
+    findLargestUntil isTxTooLarge inf
+        | inf == maxBound        = maxBound
+        | isTxTooLarge (inf + 1) = inf
+        | otherwise              = findLargestUntil isTxTooLarge (inf + 1)
+
+    maxSize = fromIntegral (getQuantity txMaxSize)
+
+    txSizeGivenInputs nInps = size
       where
         size = computeTxSize networkId (txWitnessTagFor @k) md Nothing sel
         sel  = dummyCoinSel (fromIntegral nInps) (fromIntegral nOuts)
diff --git a/lib/shelley/test/unit/Cardano/Wallet/Shelley/TransactionSpec.hs b/lib/shelley/test/unit/Cardano/Wallet/Shelley/TransactionSpec.hs
index b06a6c8cc3e..814b3dbe68e 100644
--- a/lib/shelley/test/unit/Cardano/Wallet/Shelley/TransactionSpec.hs
+++ b/lib/shelley/test/unit/Cardano/Wallet/Shelley/TransactionSpec.hs
@@ -2,6 +2,7 @@
 {-# LANGUAGE DataKinds #-}
 {-# LANGUAGE DuplicateRecordFields #-}
 {-# LANGUAGE FlexibleInstances #-}
+{-# LANGUAGE GeneralizedNewtypeDeriving #-}
 {-# LANGUAGE NamedFieldPuns #-}
 {-# LANGUAGE NumericUnderscores #-}
 {-# LANGUAGE ScopedTypeVariables #-}
@@ -198,15 +199,20 @@ spec = do
 
         res `shouldBe` Right (FeeEstimation 165413 165413)
 
+newtype GivenNumOutputs = GivenNumOutputs Word8 deriving Num
+newtype ExpectedNumInputs = ExpectedNumInputs Word8 deriving Num
+
+-- | Set of tests related to `estimateMaxNumberOfInputs` from the transaction
+-- layer.
 estimateMaxInputsTests
     :: forall k. (TxWitnessTagFor k, Typeable k)
     => Cardano.NetworkId
-    -> [(Word8, Word8)]
+    -> [(GivenNumOutputs, ExpectedNumInputs)]
     -> SpecWith ()
 estimateMaxInputsTests net cases = do
     let k = show $ typeRep (Proxy @k)
     describe ("estimateMaxNumberOfInputs for "<>k<>" on "<>show net) $ do
-        forM_ cases $ \(nOuts, nInps) -> do
+        forM_ cases $ \(GivenNumOutputs nOuts, ExpectedNumInputs nInps) -> do
             let (o,i) = (show nOuts, show nInps)
             it ("order of magnitude, nOuts = " <> o <> " → nInps = " <> i) $
                 _estimateMaxNumberOfInputs @k net (Quantity 4096) Nothing nOuts