diff --git a/lnwallet/chainfee/rates.go b/lnwallet/chainfee/rates.go
index 48c3d7df..69c458a4 100644
--- a/lnwallet/chainfee/rates.go
+++ b/lnwallet/chainfee/rates.go
@@ -9,8 +9,13 @@ import (
 
 const (
 	// FeePerKwFloor is the lowest fee rate in sat/kw that we should use for
-	// determining transaction fees.
+	// estimating transaction fees before signing.
 	FeePerKwFloor SatPerKWeight = 253
+
+	// AbsoluteFeePerKwFloor is the lowest fee rate in sat/kw of a
+	// transaction that we should ever _create_. This is the the equivalent
+	// of 1 sat/byte in sat/kw.
+	AbsoluteFeePerKwFloor SatPerKWeight = 250
 )
 
 // SatPerKVByte represents a fee rate in sat/kb.
diff --git a/lnwallet/channel.go b/lnwallet/channel.go
index 5f6eef92..600820f2 100644
--- a/lnwallet/channel.go
+++ b/lnwallet/channel.go
@@ -2412,9 +2412,9 @@ func (lc *LightningChannel) fetchCommitmentView(remoteChain bool,
 
 	effFeeRate := chainfee.SatPerKWeight(fee) * 1000 /
 		chainfee.SatPerKWeight(weight)
-	if effFeeRate < chainfee.FeePerKwFloor {
+	if effFeeRate < chainfee.AbsoluteFeePerKwFloor {
 		return nil, fmt.Errorf("height=%v, for ChannelPoint(%v) "+
-			"attempts to create commitment wigh feerate %v: %v",
+			"attempts to create commitment with feerate %v: %v",
 			nextHeight, lc.channelState.FundingOutpoint,
 			effFeeRate, spew.Sdump(commitTx))
 	}
diff --git a/lnwallet/channel_test.go b/lnwallet/channel_test.go
index 318c0b96..9f10be16 100644
--- a/lnwallet/channel_test.go
+++ b/lnwallet/channel_test.go
@@ -7638,3 +7638,41 @@ func TestChannelMaxFeeRate(t *testing.T) {
 	assertMaxFeeRate(0.000001, 690)
 	assertMaxFeeRate(0.0000001, chainfee.FeePerKwFloor)
 }
+
+// TestChannelFeeRateFloor asserts that valid commitments can be proposed and
+// received using chainfee.FeePerKwFloor as the initiator's fee rate.
+func TestChannelFeeRateFloor(t *testing.T) {
+	t.Parallel()
+
+	alice, bob, cleanUp, err := CreateTestChannels(
+		channeldb.SingleFunderTweaklessBit,
+	)
+	if err != nil {
+		t.Fatalf("unable to create test channels: %v", err)
+	}
+	defer cleanUp()
+
+	// Set the fee rate to the proposing fee rate floor.
+	minFee := chainfee.FeePerKwFloor
+
+	// Alice is the initiator, so only she can propose fee updates.
+	if err := alice.UpdateFee(minFee); err != nil {
+		t.Fatalf("unable to send fee update")
+	}
+	if err := bob.ReceiveUpdateFee(minFee); err != nil {
+		t.Fatalf("unable to receive fee update")
+	}
+
+	// Check that alice can still sign commitments.
+	sig, htlcSigs, _, err := alice.SignNextCommitment()
+	if err != nil {
+		t.Fatalf("alice unable to sign commitment: %v", err)
+	}
+
+	// Check that bob can still receive commitments.
+	err = bob.ReceiveNewCommitment(sig, htlcSigs)
+	if err != nil {
+		t.Fatalf("bob unable to process alice's new commitment: %v",
+			err)
+	}
+}