Thousands – perhaps even millions – of people could have trouble obtaining a mortgage because of problems with the way the government’s universal credit system and banks and building societies “talk” to each other.

A Guardian Money investigation into the difficulties experienced by a homebuyer living in one of the areas chosen to test the new benefit has revealed that some recipients could be at risk of being turned down for a mortgage. Some lenders are saying they will not accept universal credit at all when calculating how much they will lend, while others have apparently not amended their IT systems to deal with it – leading to problems and delays. On its published list of acceptable income types, Halifax’s website simply gives a blunt “no”.

Many lenders do accept it in some situations, but a key problem is that the most up-to-date version of universal credit is fully online and paperwork-free. Many banks and building societies, however, still insist on an official “hard copy” letter detailing how much benefit someone is getting. In essence, it’s an “old tech v new tech” clash.

Quick Guide What is universal credit and what are the problems? Show What is universal credit? Universal credit (UC) is the supposed flagship reform of the benefits system, rolling together six benefits into one, online-only system. The theoretical aim, for which there was general support across the political spectrum, was to simplify the system and increase the incentives for people to move off benefits into work. About 2 million people are currently in receipt of UC. More than 6 million will be on the benefit by the time it is fully rolled out. How long has it been around? The project was legislated for in 2011 under the auspices of its most vocal champion, Conservative MP Iain Duncan Smith. The plan was to roll it out by 2017. However, a series of management failures, expensive IT blunders and design faults mean it is now seven years behind schedule, and rollout will not be complete until 2024. The government admitted that the delay was caused in part by claimants being too scared to sign up to the new benefit. What is the biggest problem? The original design set out a minimum 42-day wait for a first payment to claimants when they moved to UC (in practice this is often up to 60 days). After sustained pressure, the government announced in the autumn 2017 budget that the wait would be reduced to 35 days from February 2018. This will partially mitigate the impact on many claimants of having no income for six weeks. The wait has led to rent arrears and evictions, hunger (food banks in UC areas report notable increases in referrals), use of expensive credit and mental distress. Ministers have expanded the availability of hardship loans (now repayable over a year) to help new claimants while they wait for payment. Housing benefit will now continue for an extra two weeks after the start of a UC claim. However, critics say the five-week wait is still too long and want it reduced to two or three weeks. Are there other problems? Plenty. Multibillion-pound cuts to work allowances imposed by the former chancellor George Osborne mean UC is far less generous than originally envisaged. According to the Resolution Foundation thinktank, about 2.5m low-income working households will be more than £1,000 a year worse off when they move to UC, reducing work incentives.

Landlords are worried that the level of rent arrears accrued by tenants on UC could lead to a rise in evictions. It's also not very user-friendly: claimants complain the system is complex, unreliable and difficult to manage, particularly if you have no internet access.

And there is concern that UC cannot deliver key promises: a critical study found it does not deliver savings, cannot prove it gets more people into work, and has plunged vulnerable claimants into hardship.

At the moment there are a relatively small number of people on this so-called “full service” digital version of the new benefit. However, the roll-out is being ramped up dramatically. By 2022 an estimated 7 million people are expected to claim universal credit, which incorporates six different benefits and tax credits (including child tax credit and working tax credit) into one (see below).

The mortgage problem came to light after Julie Broughton* contacted Money to say that she was worried she could lose the mortgage that had been agreed in principle by NatWest. She said the bank had slashed the amount it was willing to lend her from £103,000 to just £59,000 because she wasn’t able to provide it with a written letter from the Department for Work and Pensions detailing the breakdown of her payment.

“Because I can’t provide them with that one bit of paper, they have removed that income from the total … this is going to affect so many people who may now not be able to obtain a mortgage,” she claimed.

Broughton, who lives in north-east England, is among the first tranche of people to be moved to the fully digital service. At the moment around 600,000 people are on universal credit, though most of these are on the slightly less hi-tech “live service”.

Broughton is a divorced single parent who works for a charity and is currently selling the former marital home and buying a smaller property. Her income – from work, maintenance from her ex-husband, and universal credit – plus the equity she already has in the property, means she can afford a mortgage in her own right.

An “award letter” from the DWP can be a useful way of officially proving entitlement to a benefit, but it is understood that these are no longer being posted out. Some individuals applying for a home loan are submitting a print-out or screen-grab from their universal credit online account – as Broughton did – but this is being rejected as unacceptable.

Another problem is that while universal credit incorporates lots of existing benefits, many lenders only accept some of these when totting up an income. If the individual is unable to provide a clear breakdown of their benefits, the lender may decide not to take any of the payment into account.

All of these could mean a big cut in how much someone is able to borrow – which could be disastrous. Broughton’s case could therefore be the tip of the iceberg.

While Halifax says a flat “no”, it adds that it does accept some of the components of the benefit as income, including working tax credit and child tax credit. By contrast, Leeds building society says it will consider working tax credit but not child tax credit.

Catherine McKinnell is Labour MP for Newcastle upon Tyne North, and Broughton is one of her constituents. She told Money that “it cannot be right that the very system that is supposed to be a safety net is standing in the way of finding a home, and is clearly going to affect many others if it is not urgently addressed”.

She adds: “It is yet another example of how the implications of an entirely online benefit simply haven’t been thought through.” She has raised the issue directly with the DWP and asked it to come up with a solution.

It cannot be right that the very system that is supposed to be a safety net is standing in the way of finding a home

David Hollingworth at broker London & Country says that when he asked mortgage advisers at the firm about their experiences, one reported a case of a client who was in receipt of universal credit and was seeking a mortgage from a leading lender. In that instance, the lender wasn’t able to confirm the split between the different components of the benefit, only some of which it would accept. As a result the lender decided it wouldn’t take any of the client’s payment into account.

The good news for Broughton is that NatWest later agreed to approve her application. But she says it “remains firm that without the paper statement, it will not include universal credit in its calculations. Though the outcome for me has been positive, it seems unlikely that future applicants will be as successful”.

Money contacted the DWP about these issues. It told us that universal credit is modernising the welfare system and gives people 24-hour access to information about their claim, in the same way that many people bank online.

It adds: “Everyone’s claimant statement shows the breakdown of their payment. People can show this via their online account or print out their statement. A lender should accept this as evidence, but if they refuse people can speak with their work coaches.”

NatWest, however, confirms that it still requires “written proof”. “We need to fully understand the breakdown … we haven’t been told that situation has changed. The reason is that these online print-outs don’t include the breakdown required”.

* Not her real name

Latest on universal credit

In Wednesday’s budget the chancellor, Philip Hammond, announced some concessions on universal credit, the main one being that claimants will only have to wait five instead of six weeks for their first payments. The government will also allow housing benefit to continue for an extra two weeks after the start of a universal credit claim. The benefit is due to be rolled out to all jobcentres by December 2018.

Those who receive any of the existing benefits don’t need to do anything until the Department for Work and Pensions gets in touch, unless they have a change in circumstances.

Usually, you have to be 18 or over to get universal credit, but some 16- and 17-year-olds and full-time students are eligible. A payment is made up of a standard allowance and any extra amounts that apply.

• For more information go to www.gov.uk/universal-credit