It's time to re-fi and we need her to co-sign the next purchase since both wifey and I are self employed and have variable incomes.

If I rent at $1250 I'm cash flowing $150 per month but that would all go into savings for variable expenses, so that's why I'm saying I'd break even.

There are too many unknown variables moving forward.  

Folks, I have a $30k personal line of credit (6% variable APR) and am wondering if I should use it for anything or just let it sit there and look like I use 0% of available credit.

There are a lot of variables to your plan.

We can certainly afford our current (and potential new lower) mortgage, but we'd need a workaround...if one exists.Anyone have any creative financing ideas about how we might be able to accomplish the downsizing with the variables I've presented?

Typically, though its highly variable, for a rental you could do cosmetic work (e.g., paint) but nothing that requires a permit. 

Just be cognizant of the fact that the interest rate is variable. 

New construction price (-) selling cost (set by market)(-) Construction Cost (set by market)(-) Financing Cost (set by market)-------------------------(=) Builder Profit Margin (-) Cost of development (i.e replat, civil, architecture, city permit , utility, roads etc)   (set by market)(-) Cost of financing  (set by market)---------------------------------(=) Developer Profit Margin (-) Acquisition Cost for land owner (variable) ------------------------------(=) Profit for Land owner  (==< this is where you are in the value chain ) Look like you know construction cost for new dev and you can plug that in to get a ball park range of price and negotiate off that.

However, a refi CAN have a set interest rate, while a Heloc will most likely have a variable rate.