fh and i don't know what to do!

Unfortunately, if the parents are paying they have a say. You and FH could elope with close family members if that's what you both like. Then you could have a vow renewal later down the road with a larger guest list. Just a suggestion

You could suggest to have a destination wedding, this would end up keeping your guest count lower because I’m sure most of the people that your parents would want to invite are local friends that probably won’t actually travel for your wedding.

It sounds like your fiance wants the wedding, you are right. Are a lot of guests out of state? That will greatly limit who attends, or if you choose to have it on a weekday maybe?

I think a lot of older generations don't realize how much weddings cost these days. There are huge mark ups for wedding venues and services that our parents were probably not seeing.
If parents are paying for most of the bills, they do get a say, but they don't get to invite everyone under the sun or make unreasonable impositions that put you over budget. I'd have a very serious budget talk with everyone who is paying. Cutting the guest list is the best way to keep costs down. A 175 guest wedding is going to be very pricy. You need to see if the money provided is even enough to cover the cost per head.

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We actually have put have put a deposit on a venue in the town we live in. However I know about 10 people that will be invited won't make the trip to come.

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Our family is very aware of the amount that it will cost to have the wedding and they still a very sure about paying for it. But for me I feel like I am going to be worried about trying to chose the cheapest options...even if it's not my first choice..

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Most family is within an hour driving distance, so I am not sure how to go about limiting the guest list. Also we already put the deposit for 10/24/2020, which is a Saturday. We previously thought about a weekday because it is also a lot cheaper but considering we both work, we thought a weekend would be better for us.

If your family is paying then let them pay for the guests.
If you don't want them to pay (I don't blame you) you can do what is called a cake and punch reception.
You have a short reception, with only snacks and cake after the ceremony. It'd be casual, short, and cheap.
You can have your dance, have your cake, say a quick hello to everyone and be done with it.

I’m also a young bride! Do you guys have a backyard at all? My FW and I are having a small wedding in my parents backyard. The money we’re saving on a venue is going towards feeding everyone and renting a tent/tables/chairs/etc. It’s a super average backyard, not at all like the beautiful Pinterest yards, but we’re going to DIY the heck out of it and make it beautiful for cheap. Is this an option at all for you?

Totally missed the bit about the deposit that you already put down. ☹️

Hey Mackenzie. Have you and your SO decided how to proceed yet?