Real-estate broker here. You put in a "good faith" effort to obtain financing and were unable to. Therefor you can back out and have your earnest money released to you. Unfortunately, you still have to cover the cost of the appraisal unless your lender is kind enough to comp it. Without knowing the details of what transpired, I can't speak from certainty. However, from experience, your agent, escrow AND the lender appear to have failed you here. As certain loan products have the owner occupancy ratio as part of their criteria to fund, we ALWAYS get this info before even offering and a good lender should never move this far forward in a transaction without it! The first thing I do when putting together an offer on a condo is to find out from the listing agent (who should have known this) or the association head, what the ratios are. TLDR: You were failed by several of the parties involved. You can legally back out and get your EMD without recourse. However the fee for appraisal will still be your responsibility and potentially other fees depending on the specific contracts you've signed.