While working with credit-challenged buyers under our Buyer Investor Match program, we have realized this: Most people believe that foreclosures and bankruptcies showing up on a credit report could be the only reason for a mortgage application to be turned down by conventional lenders. Well if you too believe this, you will be surprised to know that the reasons aren’t limited to foreclosures and bankruptcies. In fact, the majority of home loan applications are rejected for reasons beyond the control of borrowers.

Here are five ‘weird’ reasons:

Lack of credit history

Have you ever wondered how your credit worthiness is calculated? Well the lenders determine your credit worthiness based on your financial history. One of the most important factors they take into consideration is how regularly you paid off your loans in the past. But what if you have never taken out a loan in your life: even a student loan or a credit card loan. This will mean that you don’t have any credit history for your credit score to be calculated. In this case, you will experience a difficult time convincing a lender to approve your mortgage application. (Related article: How can owner financing help you build your credit score?)

Minor financial missteps

Let’s say you defaulted on your credit card debt a few years ago. This minor financial misstep can haunt you for several years. It will bring down your credit score. Even if you have now become disciplined with your debts, most lenders will consider you a risk.

You are unable to prove your income

When you are employed with a company, you get a pay check. It’s easy for you to produce your salary statements to convince a lender about what income you make every month. The lender will approve your mortgage based on your debt-to-income ratio.

But what if you are a freelancer who doesn’t make a fixed amount of income every month? Well the lenders may not be convinced even if you prove that with your aggregated income, you can afford your monthly mortgage installments. The lenders often turn down home loan applications on this ground.

Lack of employment history

Most lenders require a borrower to have an employment history of at least two years or more to consider the home loan to be a risk-free investment. If you have never taken up an employment, you will fall out of favors with most lenders. With his underwriting rule, they try to judge if you can hold a job long enough to keep up with your mortgage payments.

Changing your job after pre-approval

You need to get pre-approved from a lender to know the amount of loan that you will qualify for based on your income, existing liabilities and employment history. Let’s say for example you have received pre-approval from a lender after producing paperwork that states your current employment and income. Now due to some unexpected circumstances, you are forced to change your job. Once your lender comes to know about it, they may reject your mortgage application (even after pre-approval) on the grounds that you have switched your job.

Lack of social security number and identity theft

Did you just relocate to the United States and as a result don’t have a social security number? Are you a victim of identity theft? Well if the answer to any of these questions is yes, it will be extremely difficult for you to quality for a mortgage.

So what to do when your mortgage application is declined?

Well your best option is owner financing. Under our Buyer Investor Match program, we have helped thousands of credit-challenged buyers realize their homeownership dream. If you can arrange for a down payment of 15% or more, you can qualify for this program and buy a home without any credit check or income verification. Click on the button below to know more about this program: