diff --git a/src/wallet/wallet.cpp b/src/wallet/wallet.cpp
--- a/src/wallet/wallet.cpp
+++ b/src/wallet/wallet.cpp
@@ -2535,12 +2535,12 @@
     std::vector<COutput> vCoins(vAvailableCoins);
     Amount value_to_select = nTargetValue;
 
+    // Default to bnb was not used. If we use it, we set it later
+    bnb_used = false;
+
     // coin control -> return all selected outputs (we want all selected to go
     // into the transaction for sure)
     if (coin_control.HasSelected() && !coin_control.fAllowOtherInputs) {
-        // We didn't use BnB here, so set it to false.
-        bnb_used = false;
-
         for (const COutput &out : vCoins) {
             if (!out.fSpendable) {
                 continue;
@@ -2567,7 +2567,6 @@
             const CWalletTx &wtx = it->second;
             // Clearly invalid input, fail
             if (wtx.tx->vout.size() <= outpoint.GetN()) {
-                bnb_used = false;
                 return false;
             }
             // Just to calculate the marginal byte size
@@ -2575,7 +2574,6 @@
                             wtx.GetSpendSize(outpoint.GetN(), false));
             nValueFromPresetInputs += coin.txout.nValue;
             if (coin.m_input_bytes <= 0) {
-                bnb_used = false;
                 // Not solvable, can't estimate size for fee
                 return false;
             }
@@ -2589,7 +2587,6 @@
             }
             setPresetCoins.insert(coin);
         } else {
-            bnb_used = false;
             return false; // TODO: Allow non-wallet inputs
         }
     }
@@ -3018,7 +3015,7 @@
             }
 
             // Choose coins to use
-            bool bnb_used;
+            bool bnb_used = false;
             if (pick_new_inputs) {
                 nValueIn = Amount::zero();
                 setCoins.clear();
diff --git a/test/functional/rpc_fundrawtransaction.py b/test/functional/rpc_fundrawtransaction.py
--- a/test/functional/rpc_fundrawtransaction.py
+++ b/test/functional/rpc_fundrawtransaction.py
@@ -90,6 +90,7 @@
         self.test_option_feerate()
         self.test_address_reuse()
         self.test_option_subtract_fee_from_outputs()
+        self.test_subtract_fee_with_presets()
 
     def test_change_position(self):
         # ensure that setting changePosition in fundraw with an exact match is
@@ -848,6 +849,21 @@
         # the total subtracted from the outputs is equal to the fee
         assert_equal(share[0] + share[2] + share[3], result[0]['fee'])
 
+    def test_subtract_fee_with_presets(self):
+        self.log.info(
+            "Test fundrawtxn subtract fee from outputs with preset inputs that are sufficient")
+
+        addr = self.nodes[0].getnewaddress()
+        txid = self.nodes[0].sendtoaddress(addr, 10)
+        vout = find_vout_for_address(self.nodes[0], txid, addr)
+
+        rawtx = self.nodes[0].createrawtransaction([{'txid': txid, 'vout': vout}], [
+                                                   {self.nodes[0].getnewaddress(): 5}])
+        fundedtx = self.nodes[0].fundrawtransaction(
+            rawtx, {'subtractFeeFromOutputs': [0]})
+        signedtx = self.nodes[0].signrawtransactionwithwallet(fundedtx['hex'])
+        self.nodes[0].sendrawtransaction(signedtx['hex'])
+
 
 if __name__ == '__main__':
     RawTransactionsTest().main()