diff --git a/fdtoverlay.c b/fdtoverlay.c
index 40c249e..8a1d11b 100644
--- a/fdtoverlay.c
+++ b/fdtoverlay.c
@@ -18,6 +18,8 @@
 
 #include "util.h"
 
+#define BUF_INCREMENT	65536
+
 /* Usage related data. */
 static const char usage_synopsis[] =
 	"apply a number of overlays to a base blob\n"
@@ -40,34 +42,81 @@ static const char * const usage_opts_help[] = {
 
 int verbose = 0;
 
+static void *apply_one(char *base, const char *overlay, size_t *buf_len,
+		       const char *name)
+{
+	char *tmp = NULL;
+	char *tmpo;
+	int ret;
+
+	/*
+	 * We take a copies first, because a a failed apply can trash
+	 * both the base blob and the overlay
+	 */
+	tmpo = xmalloc(fdt_totalsize(overlay));
+
+	do {
+		tmp = xrealloc(tmp, *buf_len);
+		ret = fdt_open_into(base, tmp, *buf_len);
+		if (ret) {
+			fprintf(stderr,
+				"\nFailed to make temporary copy: %s\n",
+				fdt_strerror(ret));
+			goto fail;
+		}
+
+		memcpy(tmpo, overlay, fdt_totalsize(overlay));
+
+		ret = fdt_overlay_apply(tmp, tmpo);
+		if (ret == -FDT_ERR_NOSPACE) {
+			*buf_len += BUF_INCREMENT;
+		}
+	} while (ret == -FDT_ERR_NOSPACE);
+
+	if (ret) {
+		fprintf(stderr, "\nFailed to apply '%s': %s\n",
+			name, fdt_strerror(ret));
+		goto fail;
+	}
+
+	free(base);
+	free(tmpo);
+	return tmp;
+
+fail:
+	free(tmpo);
+	if (tmp)
+		free(tmp);
+
+	return NULL;
+}
 static int do_fdtoverlay(const char *input_filename,
 			 const char *output_filename,
 			 int argc, char *argv[])
 {
 	char *blob = NULL;
 	char **ovblob = NULL;
-	size_t blob_len, total_len;
+	size_t buf_len;
 	int i, ret = -1;
 
-	blob = utilfdt_read(input_filename, &blob_len);
+	blob = utilfdt_read(input_filename, &buf_len);
 	if (!blob) {
 		fprintf(stderr, "\nFailed to read '%s'\n", input_filename);
 		goto out_err;
 	}
-	if (fdt_totalsize(blob) > blob_len) {
+	if (fdt_totalsize(blob) > buf_len) {
 		fprintf(stderr,
  "\nBase blob is incomplete (%lu / %" PRIu32 " bytes read)\n",
-			(unsigned long)blob_len, fdt_totalsize(blob));
+			(unsigned long)buf_len, fdt_totalsize(blob));
 		goto out_err;
 	}
 	ret = 0;
 
 	/* allocate blob pointer array */
-	ovblob = malloc(sizeof(*ovblob) * argc);
+	ovblob = xmalloc(sizeof(*ovblob) * argc);
 	memset(ovblob, 0, sizeof(*ovblob) * argc);
 
 	/* read and keep track of the overlay blobs */
-	total_len = 0;
 	for (i = 0; i < argc; i++) {
 		size_t ov_len;
 		ovblob[i] = utilfdt_read(argv[i], &ov_len);
@@ -82,22 +131,15 @@ static int do_fdtoverlay(const char *input_filename,
 				fdt_totalsize(ovblob[i]));
 			goto out_err;
 		}
-		total_len += ov_len;
 	}
 
-	/* grow the blob to worst case */
-	blob_len = fdt_totalsize(blob) + total_len;
-	blob = xrealloc(blob, blob_len);
-	fdt_open_into(blob, blob, blob_len);
+	buf_len = fdt_totalsize(blob);
 
 	/* apply the overlays in sequence */
 	for (i = 0; i < argc; i++) {
-		ret = fdt_overlay_apply(blob, ovblob[i]);
-		if (ret) {
-			fprintf(stderr, "\nFailed to apply '%s': %s\n",
-				argv[i], fdt_strerror(ret));
+		blob = apply_one(blob, ovblob[i], &buf_len, argv[i]);
+		if (!blob)
 			goto out_err;
-		}
 	}
 
 	fdt_pack(blob);