It is actually worse because they will count the entire approved heloc amount minimum payment against your debt to income ratio, not just the amount you currently have borrowed.

We stopped using the water for anything but washing and planted grass in the yard.  

Just I would not stop there.

The final numbers have to be delivered to the borrower 7 days prior to funding, not 3-5.The Initial disclosures used now (good Faith Estimate and Till) are also being replaced by a combined document that is called a Loan Estimate Forms Set, and have to be delivered to the borrower in the same 72 hours from application being taken time frame. 

Upon viewing your numbers I stop and wanted to view post you previously made. 

If the primary borrower can't pay the mortgage, the noteholder will absolutely protect their own interests and go after the partner regardless of whether or not their name is on the deed.This situation happens all the time in divorce cases where one ex-spouse quitclaims the house to the other but later finds out they can't qualify for a loan because the the mortgage is still under both their names and is killing their DTI.

The asymmetry of information goes both ways - banks and hedge funds are dealing in large volume and very often loans fall through the cracks.One of our most profitable loans was a 2nd mortgage (HELOC) that was in 1st position because the borrowers paid off the 1st mortgage.

Once you have mastered your trade, don't stop learning.

I've yet to go down the borrowing investor money route - so I'm definitely looking for information on the best way to structure this.  

One thing I've come to know is, you can never stop learning and the more you continue to grow, the further you will go.