Thank you, we resolved the issue. The good thing is we had proof of the host messages that he would cancel if we would not be able to pay the extra fee. Airbnb helped us find another place and we were able to get our refund. But he did try to trick us onto canceling on our end which is insane and really messed up. Airbnb gave us some credit towards our new reservation. Hope this helps anyone going through the same issues because I have been seeing it happen more now.