The five categories of people who cannot obtain a mortgage to purchase a home are: 1) individuals with insufficient income or employment history, 2) those with a credit score below 580, 3) applicants with a debt-to-income (DTI) ratio exceeding 43%, 4) individuals lacking a down payment or assets, and 5) people with legal or financial instability, such as recent bankruptcies or tax liens.

These categories are rooted in mortgage underwriting standards set by institutions like Fannie Mae and the Consumer Financial Protection Bureau (CFPB). A credit score below 580 is automatically rejected by most lenders due to high default risks, as shown by HUD data where 50% of applicants with scores under 580 are denied. Insufficient income or unstable employment history, such as self-employed individuals without two years of proven earnings, increases default likelihood, per a 2022 CFPB report citing 30% denial rates for such cases. A DTI above 43% reflects excessive debt repayment obligations, which lenders associate with financial strain; data from the Federal Reserve indicates that 40% of rejected applicants exceed this threshold. Lack of a down payment forces reliance on risky loans, as FHA loans require at least 3.5% down, and 25% of applicants fail to meet this minimum. Legal issues like recent bankruptcies or active tax liens disrupt trustworthiness, with Fannie Mae data showing 20% denial rates for applicants with unresolved liens. Collectively, these criteria ensure lenders mitigate risk while promoting responsible homeownership.