diff --git a/crates/aldabra-core/src/plutus.rs b/crates/aldabra-core/src/plutus.rs
index d698e0d..3b46743 100644
--- a/crates/aldabra-core/src/plutus.rs
+++ b/crates/aldabra-core/src/plutus.rs
@@ -147,9 +147,22 @@ pub fn build_signed_plutus_spend(
         .collect();
     ada_only.sort_by_key(|u| std::cmp::Reverse(u.lovelace));
 
-    // Pick collateral — largest ADA-only UTXO ≥ 5 ADA.
+    // AUDIT4-2 fix: pick the SMALLEST ADA-only UTXO that still
+    // qualifies for collateral (≥ 5 ADA), so the LARGEST stays
+    // available for funding the spend. Previously we did the
+    // inverse — collateral got the biggest utxo, funding got
+    // whatever scrap was next, and a typical wallet (one big
+    // change utxo + a tiny self-send leftover) couldn't cover
+    // payout + fee + min_utxo even with billions of lovelace
+    // sitting in the change. Surfaced 2026-05-04 audit-4 phase F2.
+    //
+    // Collateral is NEVER consumed on the happy path — it's only
+    // seized if the script fails — so its size beyond the 5-ADA
+    // floor is wasted budget. Funding, by contrast, must cover
+    // (payout + fee + change_min_utxo), so we want it big.
     let collateral = ada_only
         .iter()
+        .rev()
         .find(|u| u.lovelace >= MIN_COLLATERAL_LOVELACE)
         .ok_or_else(|| {
             WalletError::Derivation(format!(
@@ -163,10 +176,9 @@ pub fn build_signed_plutus_spend(
     // path — it's only seized if the script fails. So we need a
     // SEPARATE regular input to fund payout + fee + change.
     //
-    // Pick the next-largest ADA-only UTXO that's not the collateral.
-    // Could ease this constraint (use any ADA-only UTXO of sufficient
-    // size) but largest-first matches the rest of the wallet's
-    // selection ergonomics.
+    // Pick the LARGEST ADA-only UTXO that's not the collateral —
+    // funding has to cover payout + script-execution fee + change
+    // min_utxo, which can run several ADA at default budgets.
     let funding = ada_only
         .iter()
         .find(|u| {
@@ -532,6 +544,61 @@ mod tests {
         assert!(witness.redeemer.is_some(), "redeemer witness present");
     }
 
+    /// AUDIT4-2 regression. A wallet with one tiny qualifying UTXO
+    /// alongside one huge UTXO must pick the tiny one for collateral
+    /// and the huge one for funding (not the inverse). Pre-fix, the
+    /// huge UTXO became collateral and funding fell back to the
+    /// tiny 5-ADA scrap, too small to cover payout, script-exec
+    /// fee, and change min_utxo. Surfaced 2026-05-04 audit-4 phase F2.
+    #[test]
+    fn picks_smallest_qualifying_collateral_largest_funding() {
+        let payment = payment_from_canonical();
+        let change = change_address(Network::Preprod);
+        let payout = payout_address();
+        let locked = PlutusInput {
+            tx_hash_hex: "deadbeef".repeat(8),
+            output_index: 0,
+            lovelace: 6_000_000,
+        };
+        // Two utxos: one barely-qualifying-for-collateral (5 ADA),
+        // one huge (1000 ADA). Pre-fix would put the 1000 ADA into
+        // collateral and the 5 ADA into funding — too small to
+        // cover a 4 ADA payout + ~3 ADA fee+min_utxo. Post-fix,
+        // collateral=5 ADA, funding=1000 ADA, builds cleanly.
+        let utxos = vec![
+            InputUtxo {
+                tx_hash_hex: "aaaa".repeat(16),
+                output_index: 0,
+                lovelace: 1_000_000_000, // 1000 ADA
+                assets: Default::default(),
+            },
+            InputUtxo {
+                tx_hash_hex: "bbbb".repeat(16),
+                output_index: 0,
+                lovelace: 5_000_000, // exactly the floor
+                assets: Default::default(),
+            },
+        ];
+
+        let cbor = build_signed_plutus_spend(
+            &payment,
+            Network::Preprod,
+            &locked,
+            PlutusVersion::V3,
+            &ALWAYS_TRUE_PLUTUS_V3_CBOR,
+            &UNIT_REDEEMER_CBOR,
+            None,
+            &utxos,
+            &change,
+            &payout,
+            4_000_000,
+            DEFAULT_EX_UNITS,
+            &ProtocolParams::default(),
+        )
+        .expect("post-fix plutus spend builds with mixed-size utxos");
+        assert!(cbor.len() > 200);
+    }
+
     #[test]
     fn build_signed_plutus_spend_rejects_no_collateral() {
         let payment = payment_from_canonical();