diff --git a/src/selection.rs b/src/selection.rs
index 962c686..4306ba6 100644
--- a/src/selection.rs
+++ b/src/selection.rs
@@ -174,16 +174,26 @@ impl core::fmt::Display for CreatePsbtError {
 impl std::error::Error for CreatePsbtError {}
 
 impl Selection {
-    /// Returns none if there is a mismatch of units in `locktimes`.
-    fn _accumulate_max_locktime(
+    /// Accumulates the maximum locktime from an iterator of input-required locktimes.
+    ///
+    /// Returns the `fallback_locktime` if the locktimes iterator is empty, `Ok(lock_time)` with
+    /// the maximum locktime if all items share the same unit. Errors if there is a mismatch of
+    /// lock type units among the required locktimes.
+    fn accumulate_max_locktime(
         locktimes: impl IntoIterator<Item = absolute::LockTime>,
-    ) -> Option<absolute::LockTime> {
+        fallback_locktime: absolute::LockTime,
+    ) -> Result<absolute::LockTime, CreatePsbtError> {
+        // Accumulate locktimes required by inputs. An input-vs-input unit mismatch is an error.
+        // The fallback is only used when it is compatible with the input requirements.
+        // If the fallback is a different unit from the required locktime it is
+        // intentionally ignored so that a height-based fallback does not conflict with a
+        // time-based CLTV requirement.
         let mut acc = Option::<absolute::LockTime>::None;
         for locktime in locktimes {
             match &mut acc {
                 Some(acc) => {
                     if !acc.is_same_unit(locktime) {
-                        return None;
+                        return Err(CreatePsbtError::LockTypeMismatch);
                     }
                     if acc.is_implied_by(locktime) {
                         *acc = locktime;
@@ -192,7 +202,20 @@ impl Selection {
                 acc => *acc = Some(locktime),
             };
         }
-        acc
+        match acc {
+            // No required locktimes from inputs: use fallback directly.
+            None => Ok(fallback_locktime),
+            // Same unit as fallback: take the maximum of required and fallback.
+            Some(lock_time) if lock_time.is_same_unit(fallback_locktime) => {
+                if lock_time.is_implied_by(fallback_locktime) {
+                    Ok(fallback_locktime)
+                } else {
+                    Ok(lock_time)
+                }
+            }
+            // Fallback is a different unit: use required locktime and ignore fallback.
+            Some(lock_time) => Ok(lock_time),
+        }
     }
 
     /// Create PSBT.
@@ -209,13 +232,12 @@ impl Selection {
     ) -> Result<bitcoin::Psbt, CreatePsbtError> {
         let mut tx = bitcoin::Transaction {
             version: params.version,
-            lock_time: Self::_accumulate_max_locktime(
+            lock_time: Self::accumulate_max_locktime(
                 self.inputs
                     .iter()
-                    .filter_map(|input| input.absolute_timelock())
-                    .chain([params.fallback_locktime]),
-            )
-            .ok_or(CreatePsbtError::LockTypeMismatch)?,
+                    .filter_map(|input| input.absolute_timelock()),
+                params.fallback_locktime,
+            )?,
             input: self
                 .inputs
                 .iter()
@@ -315,7 +337,7 @@ mod tests {
     const TEST_DESCRIPTOR_PK: &str = "[83737d5e/86h/1h/0h]tpubDDR5GgtoxS8fJyjjvdahN4VzV5DV6jtbcyvVXhEKq2XtpxjxBXmxH3r8QrNbQqHg4bJM1EGkxi7Pjfkgnui9jQWqS7kxHvX6rhUeriLDKxz/0/*";
 
     #[test]
-    fn test_fallback_locktime() -> anyhow::Result<()> {
+    fn test_fallback_locktime_height() -> anyhow::Result<()> {
         let abs_locktime = absolute::LockTime::from_consensus(100_000);
         let secp = Secp256k1::new();
         let pk = "032b0558078bec38694a84933d659303e2575dae7e91685911454115bfd64487e3";
@@ -389,6 +411,64 @@ mod tests {
         Ok(())
     }
 
+    /// Tests that a height-based fallback locktime is ignored when the input
+    /// requires a time-based (UNIX timestamp) CLTV, and that an explicit time-based
+    /// fallback greater than the requirement is respected.
+    #[test]
+    fn test_fallback_locktime_respects_lock_type() -> anyhow::Result<()> {
+        let time_locktime = absolute::LockTime::from_consensus(1_734_230_218);
+        let secp = Secp256k1::new();
+        let pk = "032b0558078bec38694a84933d659303e2575dae7e91685911454115bfd64487e3";
+        let desc_str = format!("wsh(and_v(v:pk({pk}),after({time_locktime})))");
+        let desc_pk: DescriptorPublicKey = pk.parse()?;
+        let (desc, _) = Descriptor::parse_descriptor(&secp, &desc_str)?;
+        let plan = desc
+            .at_derivation_index(0)?
+            .plan(&Assets::new().add(desc_pk).after(time_locktime))
+            .unwrap();
+
+        let prev_tx = Transaction {
+            version: transaction::Version::TWO,
+            lock_time: absolute::LockTime::ZERO,
+            input: vec![TxIn::default()],
+            output: vec![TxOut {
+                script_pubkey: desc.at_derivation_index(0)?.script_pubkey(),
+                value: Amount::ONE_BTC,
+            }],
+        };
+        let input = Input::from_prev_tx(plan, prev_tx, 0, None)?;
+
+        let selection = Selection {
+            inputs: vec![input],
+            outputs: vec![Output::with_descriptor(
+                desc.at_derivation_index(1)?,
+                Amount::from_sat(1000),
+            )],
+        };
+
+        // Default fallback is height 0 (block-height unit). It is incompatible with the
+        // time-based CLTV requirement, so it must be ignored.
+        let psbt = selection.create_psbt(PsbtParams::default())?;
+        assert_eq!(
+            psbt.unsigned_tx.lock_time, time_locktime,
+            "time-based CLTV requirement should be used; height-based fallback must be ignored",
+        );
+
+        // An explicit time-based fallback *greater* than the requirement should be respected.
+        let larger_time = absolute::LockTime::from_consensus(1_772_167_108);
+        assert!(larger_time > time_locktime);
+        let psbt = selection.create_psbt(PsbtParams {
+            fallback_locktime: larger_time,
+            ..Default::default()
+        })?;
+        assert_eq!(
+            psbt.unsigned_tx.lock_time, larger_time,
+            "a larger time-based fallback should override the CLTV requirement",
+        );
+
+        Ok(())
+    }
+
     pub fn setup_test_input(confirmation_height: u32) -> anyhow::Result<Input> {
         let secp = Secp256k1::new();
         let desc = Descriptor::parse_descriptor(&secp, TEST_DESCRIPTOR)