diff --git a/builtin/sparse-checkout.c b/builtin/sparse-checkout.c
index 0217d44c5b..5b054400bf 100644
--- a/builtin/sparse-checkout.c
+++ b/builtin/sparse-checkout.c
@@ -128,7 +128,7 @@ static void clean_tracked_sparse_directories(struct repository *r)
 	 * sparse index will not delete directories that contain
 	 * conflicted entries or submodules.
 	 */
-	if (!r->index->sparse_index) {
+	if (r->index->sparse_index == INDEX_EXPANDED) {
 		/*
 		 * If something, such as a merge conflict or other concern,
 		 * prevents us from converting to a sparse index, then do
diff --git a/cache.h b/cache.h
index 6226f6a8a5..e171ce882a 100644
--- a/cache.h
+++ b/cache.h
@@ -310,6 +310,29 @@ struct untracked_cache;
 struct progress;
 struct pattern_list;
 
+enum sparse_index_mode {
+	/*
+	 * There are no sparse directories in the index at all.
+	 *
+	 * Repositories that don't use cone-mode sparse-checkout will
+	 * always have their indexes in this mode.
+	 */
+	INDEX_EXPANDED = 0,
+
+	/*
+	 * The index has already been collapsed to sparse directories
+	 * whereever possible.
+	 */
+	INDEX_COLLAPSED,
+
+	/*
+	 * The sparse directories that exist are outside the
+	 * sparse-checkout boundary, but it is possible that some file
+	 * entries could collapse to sparse directory entries.
+	 */
+	INDEX_PARTIALLY_SPARSE,
+};
+
 struct index_state {
 	struct cache_entry **cache;
 	unsigned int version;
@@ -323,14 +346,8 @@ struct index_state {
 		 drop_cache_tree : 1,
 		 updated_workdir : 1,
 		 updated_skipworktree : 1,
-		 fsmonitor_has_run_once : 1,
-
-		 /*
-		  * sparse_index == 1 when sparse-directory
-		  * entries exist. Requires sparse-checkout
-		  * in cone mode.
-		  */
-		 sparse_index : 1;
+		 fsmonitor_has_run_once : 1;
+	enum sparse_index_mode sparse_index;
 	struct hashmap name_hash;
 	struct hashmap dir_hash;
 	struct object_id oid;
diff --git a/read-cache.c b/read-cache.c
index 4df97e185e..b236042eee 100644
--- a/read-cache.c
+++ b/read-cache.c
@@ -112,7 +112,7 @@ static const char *alternate_index_output;
 static void set_index_entry(struct index_state *istate, int nr, struct cache_entry *ce)
 {
 	if (S_ISSPARSEDIR(ce->ce_mode))
-		istate->sparse_index = 1;
+		istate->sparse_index = INDEX_COLLAPSED;
 
 	istate->cache[nr] = ce;
 	add_name_hash(istate, ce);
@@ -1856,7 +1856,7 @@ static int read_index_extension(struct index_state *istate,
 		break;
 	case CACHE_EXT_SPARSE_DIRECTORIES:
 		/* no content, only an indicator */
-		istate->sparse_index = 1;
+		istate->sparse_index = INDEX_COLLAPSED;
 		break;
 	default:
 		if (*ext < 'A' || 'Z' < *ext)
@@ -3149,7 +3149,7 @@ static int do_write_locked_index(struct index_state *istate, struct lock_file *l
 				 unsigned flags)
 {
 	int ret;
-	int was_full = !istate->sparse_index;
+	int was_full = istate->sparse_index == INDEX_EXPANDED;
 
 	ret = convert_to_sparse(istate, 0);
 
diff --git a/sparse-index.c b/sparse-index.c
index a11b5cf131..7848910c15 100644
--- a/sparse-index.c
+++ b/sparse-index.c
@@ -173,7 +173,7 @@ int convert_to_sparse(struct index_state *istate, int flags)
 	 * If the index is already sparse, empty, or otherwise
 	 * cannot be converted to sparse, do not convert.
 	 */
-	if (istate->sparse_index || !istate->cache_nr ||
+	if (istate->sparse_index == INDEX_COLLAPSED || !istate->cache_nr ||
 	    !is_sparse_index_allowed(istate, flags))
 		return 0;
 
@@ -214,7 +214,7 @@ int convert_to_sparse(struct index_state *istate, int flags)
 	FREE_AND_NULL(istate->fsmonitor_dirty);
 	FREE_AND_NULL(istate->fsmonitor_last_update);
 
-	istate->sparse_index = 1;
+	istate->sparse_index = INDEX_COLLAPSED;
 	trace2_region_leave("index", "convert_to_sparse", istate->repo);
 	return 0;
 }
@@ -259,7 +259,7 @@ void expand_index(struct index_state *istate, struct pattern_list *pl)
 	 * If the index is already full, then keep it full. We will convert
 	 * it to a sparse index on write, if possible.
 	 */
-	if (!istate || !istate->sparse_index)
+	if (!istate || istate->sparse_index == INDEX_EXPANDED)
 		return;
 
 	/*