diff --git a/basicswap/wallet_manager.py b/basicswap/wallet_manager.py
index 3739cab..df588c5 100644
--- a/basicswap/wallet_manager.py
+++ b/basicswap/wallet_manager.py
@@ -38,6 +38,7 @@ class WalletManager:
     }
 
     GAP_LIMIT = 50
+    ELECTRUM_GAP_LIMIT = 20
 
     def __init__(self, swap_client, log):
         self._gap_limits: Dict[Coins, int] = {}
@@ -149,6 +150,18 @@ class WalletManager:
             )
             self._swap_client.commitDB()
 
+    def _findReusableAddress(self, coin_type: Coins, internal: bool, cursor):
+        query = (
+            "SELECT derivation_index, address FROM wallet_addresses"
+            " WHERE coin_type = ? AND is_internal = ? AND is_funded = 0"
+            " ORDER BY derivation_index ASC LIMIT 1"
+        )
+        cursor.execute(query, (int(coin_type), internal))
+        row = cursor.fetchone()
+        if row:
+            return row[0], row[1]
+        return None, None
+
     def getNewAddress(
         self, coin_type: Coins, internal: bool = False, label: str = "", cursor=None
     ) -> str:
@@ -184,6 +197,19 @@ class WalletManager:
                 else:
                     next_index = (state.last_external_index or 0) + 1
 
+            if next_index >= self.ELECTRUM_GAP_LIMIT:
+                reuse_index, reuse_addr = self._findReusableAddress(
+                    coin_type, internal, use_cursor
+                )
+                if reuse_addr is not None:
+                    self._log.debug(
+                        f"Reusing unfunded address at index {reuse_index}"
+                        f" (next would be {next_index},"
+                        f" electrum gap limit {self.ELECTRUM_GAP_LIMIT})"
+                    )
+                    self._swap_client.commitDB()
+                    return reuse_addr
+
             existing = self._swap_client.queryOne(
                 WalletAddress,
                 use_cursor,