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Las Vegas, NV (KTNV) -- Buying a home is the American dream. For one local military family, it turned into a nightmare when they put money down and never got to move in. Contact 13's Tricia Kean looks at their fight to get their deposit back.

"We were thrilled. We're like, we're so excited," says Kristin Gottschall.

It was supposed to be a new beginning for this young valley couple. Early last year, Kristin and her husband Todd decided on a big move for their growing family.

"We're expecting another baby soon. You know the house we're renting is just too small. Time for a change," says Kristin.

As a member of the Army Reserve, Todd applied and was approved for a home loan through the U.S. Department of Veterans Affairs. And in April of 2011, the couple started the process of buying a brand new home from American West Development. Todd remembers watching the construction.

"I knew exactly when they were going to break ground, they didn't have to tell me. So I was there for it. It was exciting," says Todd.

The couple put down $3,000 in earnest money. A deposit that shows they intend to buy the home. Along with a fee of more than $5,000 that includes custom items like the carpeting and security system.

"I'm walking through it, on almost a daily basis. Seeing the house go up and the floors being laid, the cabinets going in," says Todd.

But after the home was completed, the excitement faded.

"You invest all of this time, energy and money, for it to just fizzle out," says Kristin.

So what happened? The home purchasing process took an ugly turn this summer with the appraisal. In July, a third party inspection service valued the home at $240,000. The problem is, that's nearly $48,000 less than the asking price.

"We were confused. We're like, where do we go from here," says Kristin.

It turns out the V.A. loan they were approved for only covers the appraisal price. That means Kristin and Todd have to make up the $48,000 difference. And they say American West isn't willing to lower the asking price or return their deposit.

"I talked to the Escrow Coordinator at American West. She said she went through our contract and said there was nothing in there that said we should get our money back," says Kristin.

Contact 13 reached out to American West. They wouldn't go on camera, but in a statement the company says when Kristin and Todd failed to close on the house, they were "consequently in breach of the contract." Their contract says any breach could be grounds for losing a portion if not all of their earnest money and other deposits.
 

In a letter to Kristin and Todd, American West says it will apply their deposit towards the purchase of a new home. But Kristin says no deal.

"At this point I think giving them my money that I work so hard for would really not benefit me," says Kristin.

Todd says now they're stuck.

"I kind of feel like it's a deployment. Because as a reservist, when you get deployed your life stops. What you're doing, it stops. And your life is basically on hold until you get back and can resume it, and that's where we're at," says Todd.

Todd says they should still be eligible for a refund since they were buying the home using a V.A. loan. Contact 13 called Veterans Affairs. They say Todd and Kristin wouldn't be eligible for the deposit that went towards their upgrades. But a sales contract must allow a veteran to receive his earnest money back when the home's appraised value is less than the sales price. And Todd says that's exactly what's happened.

"I didn't hire the guy to do the appraisal. It was a third party that came in and gave his honest opinion. So it's not our fault," says Todd.

In the end, American West tells Contact 13, hundreds if not thousands of families have purchased their homes with V.A. funding without any problems. But Kristin and Todd say they don't feel they're being treated fairly.

"All that money, I mean that was our nest egg," says Todd. "I shouldn't be out my deposit money, just because they are selling a home for more than it's worth," says Kristin.

So here's the Contact 13 bottom line. The V.A. says it's in talks with American West about this case. Meanwhile, the couple is still renting.

If you're buying a home, know that you're going to be signing a lot of paperwork. It can be intimidating, but make sure you read and understand what you're signing. If you're looking for some advice during your home purchase, the Financial Guidance Center can help.