Yes, you've probably chosen a backyard breeder. I would ask the breeder point blank if she does health testing first before making any decisions. Here is the link to the
American Pomeranian Club and the health screenings they recommend for breeding stock. She may just not advertise it on her website, although most ethical breeders are quite upfront and proud of it.
If you find that this breeder is in fact a back yard breeder, you'll have to decide for yourself if this is someone you want to give more of your money to. Some backyard breeders are in it purely for the money and have little regard for the health and temperament of the puppies they produce. They're pretty easy to spot if they pump out 3+ litters a year. Others are fairly well meaning and at least try to produce good puppies, but they just don't do the recommended testing or proving of their breeding stock. You'll also want to compare the prices of BYB poms and well bred pups with health tested and proven parents. If a BYB is charging $3,000 for a pup and the well bred breeder is also charging $3,000 for a pup....well, one of them is in it for the money.
Either way, I think your deposit is probably lost. If I were in your position, I would do more research on the breeder and decide if she's of the well meaning BYB sort. If you've met the parents and their temperaments are sound, they're well cared for and live with her in the house, and the price of the puppy isn't in the range of what serious, ethical, and really great breeders of multiple generations of champion dogs charge, I would probably buy the puppy and take it as a learning experience and do better next time. You'll have to accept that your dog might be at higher risk for some common pom health issues if the parents weren't cleared, however.
If the breeder is of the BYB variety that throws a male and female together willy nilly, pumps out multiple litters, keeps dogs in a "boarding kennel" environment all day every day outside of their home, and is very clearly only in it for money, I don't think I would feel comfortable giving my money to that person under any circumstances. I would give up the deposit and move on. You'll likely be saving yourself money in the long run, because dogs like that can be riddled with health problems or behavioral issues.
For those of us not in the know, what does "health tested" consist of that a "regular vet" doesn't...?
"Health Tested" usually means the parents of the puppy have been tested by a third party (such as the Orthopedic Foundation or Animals (OFA)) for genetic health issues. For example, the link I posted above is the recommended testing for the Pomeranian breed. Here is a little more information on that procedure from the
OFA. Puppies should also be seen by a regular vet for an examination, too, and some OFA screenings can be done by any licensed veterinarian but an application must be sent to the OFA. Specifics are on the OFA website, too.