Is this correct?

Keep in mind things can happen, for example the value of the house could change in the meantime, messing with that ratio.Also, with an FHA loan the mortgage insurance is more expensive, and if I remember correctly it's FIVE years before you can apply to have it taken off.The moral of the story is just put down 20%.

I guess the correct question is will a early termination fee hold up in NJ court?

Most lenders answer questions, but not always correctly.  

If I understand you correctly, you would like to purchase a home through Seller#1 (you being Buyer#1), and while you are in the process of closing that deal (in about a months time), you fix up the property and find a Buyer#2 (and you being Seller#2)?

its easy to prove.was the insurance correct?

You are correct that the property has not been relisted for auctioning.  

It's easy to jump ahead to solutions and not do the hard analysis of studying the problem first to arrive at a solution that correctly answers the question.  

@John PrunerWe are not very active on Bigger Pockets hence my inability to correctly tag you 9 months back!

Lynn, correct.. but speaking of filing a civil suit if it were to go to trail how much do you think I can expect to pay?