diff --git a/internal/modules/selfupdate.go b/internal/modules/selfupdate.go
index 93ccb4b..ab850c9 100644
--- a/internal/modules/selfupdate.go
+++ b/internal/modules/selfupdate.go
@@ -369,11 +369,26 @@ func installSelfUpdate(tmpPath, currentBin string) error {
 	}
 
 	dir := filepath.Dir(currentBin)
-	if !spaceFor(dir, uint64(info.Size())) {
+
+	// The current binary is unlinked below before the new copy lands, so
+	// its space counts towards the budget; without it the pre-check
+	// demands the whole new binary from free space alone and every update
+	// on a tiny overlay fails even though the swap itself would fit (#547).
+	// Apparent size is used on purpose: on compressing filesystems (ubifs)
+	// it overestimates what the unlink actually frees, which is the safe
+	// direction for a pre-check (a false "not enough" only fails the
+	// update; a false "enough" defers ENOSPC to the copy, which is already
+	// handled gracefully).
+	var freed uint64
+	if cur, err := os.Stat(currentBin); err == nil && cur.Size() > 0 {
+		freed = uint64(cur.Size())
+	}
+
+	if !spaceFor(dir, uint64(info.Size()), freed) {
 		// Best effort: drop the package cache to make room on tiny
 		// overlays. No-op where the directory does not exist.
 		os.RemoveAll("/etc/apk/cache")
-		if !spaceFor(dir, uint64(info.Size())) {
+		if !spaceFor(dir, uint64(info.Size()), freed) {
 			return fmt.Errorf("not enough space on %s for the new binary (need ~%d bytes)", dir, info.Size())
 		}
 	}
@@ -390,14 +405,16 @@ func installSelfUpdate(tmpPath, currentBin string) error {
 }
 
 // spaceFor reports whether dir has at least needed bytes available plus a
-// small headroom. Unknown filesystems (statfs failure) are treated as
-// having room so the update is never blocked by an exotic mount.
-func spaceFor(dir string, needed uint64) bool {
+// small headroom, counting freed bytes that the install is about to
+// release (the current binary being replaced). Unknown filesystems (statfs
+// failure) are treated as having room so the update is never blocked by an
+// exotic mount.
+func spaceFor(dir string, needed, freed uint64) bool {
 	var st syscall.Statfs_t
 	if err := syscall.Statfs(dir, &st); err != nil || st.Bsize <= 0 {
 		return true
 	}
-	avail := uint64(st.Bavail) * uint64(st.Bsize)
+	avail := uint64(st.Bavail)*uint64(st.Bsize) + freed
 	return avail >= needed+(1<<20)
 }
 
diff --git a/internal/modules/selfupdate_install_test.go b/internal/modules/selfupdate_install_test.go
index 078b6eb..ae9ef28 100644
--- a/internal/modules/selfupdate_install_test.go
+++ b/internal/modules/selfupdate_install_test.go
@@ -3,6 +3,7 @@ package modules
 import (
 	"os"
 	"path/filepath"
+	"syscall"
 	"testing"
 )
 
@@ -55,6 +56,31 @@ func TestInstallSelfUpdateReplacesBinary(t *testing.T) {
 	}
 }
 
+// The space pre-check must count the current binary's size towards the
+// budget, because the install unlinks it before copying the new one (#547):
+// on a tiny overlay the free space alone is always smaller than the new
+// binary, and demanding it up front makes every self-update fail.
+func TestSpaceForCountsFreedBytes(t *testing.T) {
+	dir := t.TempDir()
+	var st syscall.Statfs_t
+	if err := syscall.Statfs(dir, &st); err != nil || st.Bsize <= 0 {
+		t.Skip("statfs not available")
+	}
+	avail := uint64(st.Bavail) * uint64(st.Bsize)
+
+	need := avail + 10<<20
+	if spaceFor(dir, need, 0) {
+		t.Fatalf("spaceFor(need=%d, freed=0) = true, want false", need)
+	}
+	if !spaceFor(dir, need, 20<<20) {
+		t.Fatalf("spaceFor(need=%d, freed=%d) = false, want true", need, 20<<20)
+	}
+	// The 1MiB headroom is still required on top of avail+freed.
+	if spaceFor(dir, avail+20<<20, 20<<20) {
+		t.Fatal("spaceFor without the 1MiB headroom = true, want false")
+	}
+}
+
 // A missing current binary (e.g. a previous partial install) must not
 // block the install: the rescue copy fails, is logged, and the update
 // continues.