diff --git a/doc/lightning-fundpsbt.7.md b/doc/lightning-fundpsbt.7.md
index f234fdd50..5e25e4861 100644
--- a/doc/lightning-fundpsbt.7.md
+++ b/doc/lightning-fundpsbt.7.md
@@ -47,6 +47,9 @@ the actual witness weight will be used.
 *excess\_as\_change* is an optional boolean to flag to add a change output
 for the excess sats.
 
+*nonwrapped* is an optional boolean to signal to filter out any p2sh-wrapped
+inputs from funding this PSBT.
+
 EXAMPLE USAGE
 -------------
 
diff --git a/wallet/reservation.c b/wallet/reservation.c
index de9b5ed37..fef179944 100644
--- a/wallet/reservation.c
+++ b/wallet/reservation.c
@@ -443,7 +443,7 @@ static struct command_result *json_fundpsbt(struct command *cmd,
 	u32 *feerate_per_kw;
 	u32 *minconf, *weight, *min_witness_weight;
 	struct amount_sat *amount, input, diff;
-	bool all, *excess_as_change;
+	bool all, *excess_as_change, *nonwrapped;
 	u32 *locktime, *reserve, maxheight;
 
 	if (!param(cmd, buffer, params,
@@ -458,6 +458,8 @@ static struct command_result *json_fundpsbt(struct command *cmd,
 			     &min_witness_weight, 0),
 		   p_opt_def("excess_as_change", param_bool,
 			     &excess_as_change, false),
+		   p_opt_def("nonwrapped", param_bool,
+			     &nonwrapped, false),
 		   NULL))
 		return command_param_failed();
 
@@ -479,6 +481,7 @@ static struct command_result *json_fundpsbt(struct command *cmd,
 					&diff,
 					*feerate_per_kw,
 					maxheight,
+					*nonwrapped,
 					cast_const2(const struct utxo **, utxos));
 		if (utxo) {
 			utxo_weight = utxo_spend_weight(utxo,
diff --git a/wallet/test/run-wallet.c b/wallet/test/run-wallet.c
index b03a802f6..0652982a6 100644
--- a/wallet/test/run-wallet.c
+++ b/wallet/test/run-wallet.c
@@ -1050,13 +1050,14 @@ static bool test_wallet_outputs(struct lightningd *ld, const tal_t *ctx)
 	/* Arbitrarily set scriptpubkey len to 20 */
 	u.scriptPubkey = tal_arr(w, u8, 20);
 	memset(u.scriptPubkey, 1, 20);
-	CHECK_MSG(wallet_add_utxo(w, &u, p2sh_wpkh),
+	CHECK_MSG(wallet_add_utxo(w, &u, our_change),
 		  "wallet_add_utxo with close_info");
 
 	/* Now select them */
 	utxos = tal_arr(w, const struct utxo *, 0);
 	while ((one_utxo = wallet_find_utxo(w, w, 100, NULL, 253,
 					    0 /* no confirmations required */,
+					    false,
 					    utxos)) != NULL) {
 		tal_arr_expand(&utxos, one_utxo);
 	}
@@ -1145,6 +1146,7 @@ static bool test_wallet_outputs(struct lightningd *ld, const tal_t *ctx)
 	utxos = tal_arr(w, const struct utxo *, 0);
 	while ((one_utxo = wallet_find_utxo(w, w, 100, NULL, 253,
 					    0 /* no confirmations required */,
+					    false,
 					    utxos)) != NULL) {
 		tal_arr_expand(&utxos, one_utxo);
 	}
@@ -1166,6 +1168,7 @@ static bool test_wallet_outputs(struct lightningd *ld, const tal_t *ctx)
 	utxos = tal_arr(w, const struct utxo *, 0);
 	while ((one_utxo = wallet_find_utxo(w, w, 104, NULL, 253,
 					    0 /* no confirmations required */,
+					    false,
 					    utxos)) != NULL) {
 		tal_arr_expand(&utxos, one_utxo);
 	}
@@ -1183,6 +1186,35 @@ static bool test_wallet_outputs(struct lightningd *ld, const tal_t *ctx)
 	/* Now un-reserve them */
 	tal_free(utxos);
 
+	/* Check that nonwrapped flag works */
+	utxos = tal_arr(w, const struct utxo *, 0);
+	while ((one_utxo = wallet_find_utxo(w, w, 100, NULL, 253,
+					    0 /* no confirmations required */,
+					    true,
+					    utxos)) != NULL) {
+		tal_arr_expand(&utxos, one_utxo);
+	}
+	/* No nonwrapped outputs available */
+	CHECK(tal_count(utxos) == 0);
+	tal_free(utxos);
+
+	/* So we add one... */
+	memset(&u.outpoint, 4, sizeof(u.outpoint));
+	u.amount = AMOUNT_SAT(4);
+	u.close_info = tal_free(u.close_info);
+	CHECK_MSG(wallet_add_utxo(w, &u, p2wpkh),
+		  "wallet_add_utxo failed, p2wpkh");
+
+	utxos = tal_arr(w, const struct utxo *, 0);
+	while ((one_utxo = wallet_find_utxo(w, w, 100, NULL, 253,
+					    0 /* no confirmations required */,
+					    true,
+					    utxos)) != NULL) {
+		tal_arr_expand(&utxos, one_utxo);
+	}
+	/* And that's what comes back */
+	CHECK(tal_count(utxos) == 1);
+
 	db_commit_transaction(w->db);
 	return true;
 }
diff --git a/wallet/wallet.c b/wallet/wallet.c
index fb03ed644..73e52400d 100644
--- a/wallet/wallet.c
+++ b/wallet/wallet.c
@@ -530,6 +530,7 @@ struct utxo *wallet_find_utxo(const tal_t *ctx, struct wallet *w,
 			      struct amount_sat *amount_hint,
 			      unsigned feerate_per_kw,
 			      u32 maxheight,
+			      bool nonwrapped,
 			      const struct utxo **excludes)
 {
 	struct db_stmt *stmt;
@@ -569,6 +570,7 @@ struct utxo *wallet_find_utxo(const tal_t *ctx, struct wallet *w,
 	while (!utxo && db_step(stmt)) {
 		utxo = wallet_stmt2output(ctx, stmt);
 		if (excluded(excludes, utxo)
+		    || (nonwrapped && utxo->is_p2sh)
 		    || !deep_enough(maxheight, utxo, current_blockheight))
 			utxo = tal_free(utxo);
 
diff --git a/wallet/wallet.h b/wallet/wallet.h
index 537580a3d..4661e3e39 100644
--- a/wallet/wallet.h
+++ b/wallet/wallet.h
@@ -473,6 +473,7 @@ struct utxo **wallet_get_unconfirmed_closeinfo_utxos(const tal_t *ctx,
  * @amount_we_are_short: optional amount.
  * @feerate_per_kw: feerate we are using.
  * @maxheight: zero (if caller doesn't care) or maximum blockheight to accept.
+ * @nonwrapped: filter out p2sh-wrapped inputs
  * @excludes: UTXOs not to consider.
  *
  * If @amount_we_are_short is not NULL, we try to get something very close
@@ -486,6 +487,7 @@ struct utxo *wallet_find_utxo(const tal_t *ctx, struct wallet *w,
 			      struct amount_sat *amount_we_are_short,
 			      unsigned feerate_per_kw,
 			      u32 maxheight,
+			      bool nonwrapped,
 			      const struct utxo **excludes);
 
 /**