"Inability to repay" can mean the debt ratio is too high for the purchase price applied or the type/source of income is not considered stable.
There are several potential reasons for the denial....
1. Income too low to buy at the price on the application... possible solution, lower purchase price
2. Too much debt to qualify at the price on the application... possible solution, pay down debt, wait until later to buy... or use down payment money to pay down debt and borrow more on the new house (this can work wonders for the debt ratio in some cases)
3. If the borrower is self employed or earns commissions/bonuses, they must have a 2 year history on the job. Withouth two years, the only option to buy now would be a co-signor.
There are other reasons as well. The loan officer should have taken the time to give the buyer some direction on what it would take to get the loan approved.
I've seen a lot of buyers getting pre-approved through call center lenders... there is not a lot of creative thinking when dealing with a call center rep. If the computer tells them the loan is denied, that is the answer they give.