diff --git a/cmd/soroban-rpc/internal/test/simulate_transaction_test.go b/cmd/soroban-rpc/internal/test/simulate_transaction_test.go
index b9af738bb..e2df22533 100644
--- a/cmd/soroban-rpc/internal/test/simulate_transaction_test.go
+++ b/cmd/soroban-rpc/internal/test/simulate_transaction_test.go
@@ -306,6 +306,64 @@ func TestSimulateTransactionSucceeds(t *testing.T) {
 	assert.Equal(t, result, resultForRequestWithDifferentTxSource)
 }
 
+func TestSimulateTransactionWithAuth(t *testing.T) {
+	test := NewTest(t)
+
+	ch := jhttp.NewChannel(test.sorobanRPCURL(), nil)
+	client := jrpc2.NewClient(ch, nil)
+
+	sourceAccount := keypair.Root(StandaloneNetworkPassphrase)
+	address := sourceAccount.Address()
+	account := txnbuild.NewSimpleAccount(address, 0)
+
+	helloWorldContract := getHelloWorldContract(t)
+
+	params := preflightTransactionParams(t, client, txnbuild.TransactionParams{
+		SourceAccount:        &account,
+		IncrementSequenceNum: true,
+		Operations: []txnbuild.Operation{
+			createInstallContractCodeOperation(account.AccountID, helloWorldContract),
+		},
+		BaseFee: txnbuild.MinBaseFee,
+		Preconditions: txnbuild.Preconditions{
+			TimeBounds: txnbuild.NewInfiniteTimeout(),
+		},
+	})
+
+	tx, err := txnbuild.NewTransaction(params)
+	assert.NoError(t, err)
+	sendSuccessfulTransaction(t, client, sourceAccount, tx)
+
+	deployContractOp := createCreateContractOperation(t, address, helloWorldContract, StandaloneNetworkPassphrase)
+	deployContractParams := txnbuild.TransactionParams{
+		SourceAccount:        &account,
+		IncrementSequenceNum: true,
+		Operations: []txnbuild.Operation{
+			deployContractOp,
+		},
+		BaseFee: txnbuild.MinBaseFee,
+		Preconditions: txnbuild.Preconditions{
+			TimeBounds: txnbuild.NewInfiniteTimeout(),
+		},
+	}
+	response := simulateTransactionFromTxParams(t, client, deployContractParams)
+	require.NotEmpty(t, response.Results)
+	require.Len(t, response.Results[0].Auth, 1)
+	require.Empty(t, deployContractOp.Auth)
+
+	var auth xdr.SorobanAuthorizationEntry
+	assert.NoError(t, xdr.SafeUnmarshalBase64(response.Results[0].Auth[0], &auth))
+	require.Equal(t, auth.Credentials.Type, xdr.SorobanCredentialsTypeSorobanCredentialsSourceAccount)
+	deployContractOp.Auth = append(deployContractOp.Auth, auth)
+	deployContractParams.Operations = []txnbuild.Operation{deployContractOp}
+
+	// preflight deployContractOp with auth
+	deployContractParams = preflightTransactionParams(t, client, deployContractParams)
+	tx, err = txnbuild.NewTransaction(deployContractParams)
+	assert.NoError(t, err)
+	sendSuccessfulTransaction(t, client, sourceAccount, tx)
+}
+
 func TestSimulateInvokeContractTransactionSucceeds(t *testing.T) {
 	test := NewTest(t)
 
diff --git a/cmd/soroban-rpc/lib/preflight/src/preflight.rs b/cmd/soroban-rpc/lib/preflight/src/preflight.rs
index 7b007400f..d9f7d787f 100644
--- a/cmd/soroban-rpc/lib/preflight/src/preflight.rs
+++ b/cmd/soroban-rpc/lib/preflight/src/preflight.rs
@@ -46,6 +46,12 @@ pub(crate) fn preflight_invoke_hf_op(
         .context("cannot create budget")?;
     let storage = Storage::with_recording_footprint(ledger_storage_rc.clone());
     let host = Host::with_storage_and_budget(storage, budget);
+    host.set_source_account(source_account.clone())
+        .context("cannot set source account")?;
+    host.set_diagnostic_level(DiagnosticLevel::Debug)
+        .context("cannot set debug diagnostic level")?;
+    host.set_ledger_info(ledger_info.clone())
+        .context("cannot set ledger info")?;
 
     // We make an assumption here:
     // - if a transaction doesn't include any soroban authorization entries the client either
@@ -63,13 +69,6 @@ pub(crate) fn preflight_invoke_hf_op(
             .context("cannot set authorization entries")?;
     }
 
-    host.set_diagnostic_level(DiagnosticLevel::Debug)
-        .context("cannot set debug diagnostic level")?;
-    host.set_source_account(source_account.clone())
-        .context("cannot set source account")?;
-    host.set_ledger_info(ledger_info.clone())
-        .context("cannot set ledger info")?;
-
     // Run the preflight.
     let maybe_result = host
         .invoke_function(invoke_hf_op.host_function.clone())