Financing 2nd property have HELOC from primary, DTI concerns

[Anirudh Goel]

Hi everyone, i wish i had found this forum earlier. I have fully paid off my primary residence and have secured a HELOC of $435K against it from US Bank, secured a month ago. In the process i have also bought another home and now having chase bank finance the mortgage for the second home. My goal is to move to the new home as primary and sell the first home a little later. Now here comes the kicker, the lender is suggesting me to reduce the HELOC limit so that i look good on the DTI. Apparently chase assumes 1% of the HELOC against debt so i am being slapped with a $4350 payment assumption despite having 0 outstanding balance on it. Is this common practice on Chase's front? Can i view their overlays that make them consider it this way, why do they not consider my interest rate and the maximum payment i will be charged at?

The second problem is that US Bank rep says they can't reduce the limit on my HELOC and i will have to go through a re-fi of the HELOC, is that true? I call that BS but do not have any evidence to disprove them.

Tl;dr, i have all liquidity sucked up in HELOC and now have a case of a higher DTI even though i am not using full HELOC funds. Can't reduce the HELOC limit nor figure a way out.