It all depends on the way your contract was written - if there was a financing contingency, then, yes, you may get out of the contract legally without being in default.
However, I am curious as to the reason why you chose to pay off the van knowing that you would need the funds for closing costs etc. Did you want not to qualify for the loan because you did not want to purchase that house any more?
Do not misunderstand me - my belief is that no buyer should be forced to purchase a house unless they truly want to. However, contract is a binding document - the seller relied on your offer and most likely missed out on other potential offers that could have ended in settlement.
If you did have financing contingency then YES, you can get out legally without EMD penalty or being in default. However if you did not have financing contingency, then the Seller is entitled to the Earnest Money Deposit. The Seller may also choose to take you to the court for nonperformance, unless the contract says otherwise.
Once the offer is signed and ratified by both parties it becomes a binding document and should never be taken for granted.