@Cassandra Sifford I will respectfully disagree with Peter's post for most people.Typically, HELOC rates are not lower than a conforming cash out refinance.

Any room rental use not conforming to these conditions shall be considered a boardinghouse, lodging house, hotel or motel, as applicable, and shall be subject to the requirements for that use.A. 

My contribution here would be that if you can qualify for conforming/ conventional loans to reach your goals, then use those first. 

Should I ever sell, I'll convert the top floor to 3 units and that way it would be eligible for favorable 1-4 unit FNMA/FHA/VA conforming financing...Good luck on your deal!

However, it's true that I have a great fear of not earning enough fast enough and regular conforming rates rising too high for my sweet spot for new purchases.  

Most conforming/ conventional lenders will use the sale price as the home's value for 12 mos regardless of whether you have a new or higher appraisal. 

Many times the debate isn't really about the legality, but about conforming with lenders rules and/or consumer protection acts.

Every property, houses, commercial or non-conforming are in a market.What smart investors understand that their success is not contingent on the so called "Market", that market that news folks write about is not the investor's market.

If it was me, I would take a cash out loan on a new 30yr Fixed up to $417K to keep it conforming to get the best rate possible locked in for 30yrs.  

HI Carlos its because conforming limit for 4 units is 801,950 on a fourplex up to a max of 75% loan to value.By stating 287,500 is 25% means your purchase price (you did not mention) would be 1,150,000.The reason you got countered with more "down payment," is because you've now ventured into "high balance limits."