diff --git a/cloudinit/config/cc_ssh_authkey_fingerprints.py b/cloudinit/config/cc_ssh_authkey_fingerprints.py
index c2d3b0d1c55..db5c1454904 100755
--- a/cloudinit/config/cc_ssh_authkey_fingerprints.py
+++ b/cloudinit/config/cc_ssh_authkey_fingerprints.py
@@ -123,6 +123,11 @@ def handle(name, cfg, cloud, log, _args):
     (users, _groups) = ug_util.normalize_users_groups(cfg, cloud.distro)
     for (user_name, _cfg) in users.items():
         if _cfg.get("no_create_home") or _cfg.get("system"):
+            log.debug(
+                "Skipping printing of ssh fingerprints for user '%s' because "
+                "no home directory is created",
+                user_name,
+            )
             continue
 
         (key_fn, key_entries) = ssh_util.extract_authorized_keys(user_name)
diff --git a/cloudinit/config/cc_users_groups.py b/cloudinit/config/cc_users_groups.py
index d3c945e6ca2..96e63242c63 100644
--- a/cloudinit/config/cc_users_groups.py
+++ b/cloudinit/config/cc_users_groups.py
@@ -152,14 +152,29 @@
 
 LOG = logging.getLogger(__name__)
 
+# NO_HOME and NEED_HOME are mutually exclusive options
+NO_HOME = ("no_create_home", "system")
+NEED_HOME = ("ssh_authorized_keys", "ssh_import_id", "ssh_redirect_user")
+
 
 def handle(name, cfg, cloud, _log, _args):
     (users, groups) = ug_util.normalize_users_groups(cfg, cloud.distro)
     (default_user, _user_config) = ug_util.extract_default(users)
     cloud_keys = cloud.get_public_ssh_keys() or []
+
     for (name, members) in groups.items():
         cloud.distro.create_group(name, members)
+
     for (user, config) in users.items():
+
+        no_home = [key for key in NO_HOME if config.get(key)]
+        need_home = [key for key in NEED_HOME if config.get(key)]
+        if no_home and need_home:
+            raise ValueError(
+                f"Not creating user {user}. Key(s) {', '.join(need_home)}"
+                f" cannot be provided with {', '.join(no_home)}"
+            )
+
         ssh_redirect_user = config.pop("ssh_redirect_user", False)
         if ssh_redirect_user:
             if "ssh_authorized_keys" in config or "ssh_import_id" in config:
@@ -186,6 +201,7 @@ def handle(name, cfg, cloud, _log, _args):
             else:
                 config["ssh_redirect_user"] = default_user
                 config["cloud_public_ssh_keys"] = cloud_keys
+
         cloud.distro.create_user(user, **config)
 
 
diff --git a/doc/examples/cloud-config-user-groups.txt b/doc/examples/cloud-config-user-groups.txt
index 987d9508231..a66b0d75b5f 100644
--- a/doc/examples/cloud-config-user-groups.txt
+++ b/doc/examples/cloud-config-user-groups.txt
@@ -87,6 +87,8 @@ users:
 #   no_log_init: When set to true, do not initialize lastlog and faillog database.
 #   ssh_import_id: Optional. Import SSH ids
 #   ssh_authorized_keys: Optional. [list] Add keys to user's authorized keys file
+#                        An error will be raised if no_create_home or system is
+#                        also set.
 #   ssh_redirect_user: Optional. [bool] Set true to block ssh logins for cloud
 #       ssh public keys and emit a message redirecting logins to
 #       use <default_username> instead. This option only disables cloud
diff --git a/tests/unittests/config/test_cc_users_groups.py b/tests/unittests/config/test_cc_users_groups.py
index 9210c1f6bd6..af8bdc3027b 100644
--- a/tests/unittests/config/test_cc_users_groups.py
+++ b/tests/unittests/config/test_cc_users_groups.py
@@ -192,6 +192,27 @@ def test_users_with_ssh_redirect_user_default_str(self, m_user, m_group):
         )
         m_group.assert_not_called()
 
+    def test_users_without_home_cannot_import_ssh_keys(self, m_user, m_group):
+        cfg = {
+            "users": [
+                "default",
+                {
+                    "name": "me2",
+                    "ssh_import_id": ["snowflake"],
+                    "no_create_home": True,
+                },
+            ]
+        }
+        cloud = self.tmp_cloud(distro="ubuntu", sys_cfg={}, metadata={})
+        with self.assertRaises(ValueError) as context_manager:
+            cc_users_groups.handle("modulename", cfg, cloud, None, None)
+        m_group.assert_not_called()
+        self.assertEqual(
+            "Not creating user me2. Key(s) ssh_import_id cannot be provided"
+            " with no_create_home",
+            str(context_manager.exception),
+        )
+
     def test_users_with_ssh_redirect_user_non_default(self, m_user, m_group):
         """Warn when ssh_redirect_user is not 'default'."""
         cfg = {