diff --git a/sparse-index.c b/sparse-index.c
index 3d7f2164e25ee5..62b2393f5fb117 100644
--- a/sparse-index.c
+++ b/sparse-index.c
@@ -402,7 +402,7 @@ void expand_index(struct index_state *istate, struct pattern_list *pl)
 		if (pl &&
 		    path_matches_pattern_list(ce->name, ce->ce_namelen,
 					      NULL, &dtype,
-					      pl, istate) == NOT_MATCHED) {
+					      pl, full) == NOT_MATCHED) {
 			set_index_entry(full, full->cache_nr++, ce);
 			continue;
 		}
@@ -430,6 +430,7 @@ void expand_index(struct index_state *istate, struct pattern_list *pl)
 	}
 
 	/* Copy back into original index. */
+	istate->name_hash_initialized = full->name_hash_initialized;
 	memcpy(&istate->name_hash, &full->name_hash, sizeof(full->name_hash));
 	memcpy(&istate->dir_hash, &full->dir_hash, sizeof(full->dir_hash));
 	istate->sparse_index = pl ? INDEX_PARTIALLY_SPARSE : INDEX_EXPANDED;
diff --git a/t/t1092-sparse-checkout-compatibility.sh b/t/t1092-sparse-checkout-compatibility.sh
index 6e230b54876061..e436cb67dfca26 100755
--- a/t/t1092-sparse-checkout-compatibility.sh
+++ b/t/t1092-sparse-checkout-compatibility.sh
@@ -317,6 +317,22 @@ test_expect_success 'root directory cannot be sparse' '
 	test_cmp expect actual
 '
 
+test_expect_success 'sparse-checkout with untracked files and dirs' '
+	init_repos &&
+
+	# Empty directories outside sparse cone are deleted
+	run_on_sparse mkdir -p deep/empty &&
+	test_sparse_match git sparse-checkout set folder1 &&
+	test_must_be_empty sparse-checkout-err &&
+	run_on_sparse test_path_is_missing deep &&
+
+	# Untracked files outside sparse cone are not deleted
+	run_on_sparse touch folder1/another &&
+	test_sparse_match git sparse-checkout set folder2 &&
+	grep "directory ${SQ}folder1/${SQ} contains untracked files" sparse-checkout-err &&
+	run_on_sparse test_path_exists folder1/another
+'
+
 test_expect_success 'status with options' '
 	init_repos &&
 	test_sparse_match ls &&