I found a lender that gave HELOCs on those investment properties which I access when buying “all cash”...

I was looking into utilizing an FHA (down payment would be something feasible for a property <$400k-->refinance to utilize as cashflowing rental), USDA (no down payment, high mortgage-->refinance to utilize as cashflowing rental), or HELOC (interest only payment, then seek to refinance and utilize property as cashflowing rental) to acquire this property.  

Some people use conventional funding and then put a HELOC on another property, sometimes their owner occupied property, to bring the first property up to speed. 

Here is some info on the product: Product Overview Combines home purchase or refinance (limited cash out) with home improvement financing in one loan with one closingProvides a convenient way for borrowers to make renovations, repairs, or improvements totaling up to 75% of the "as-completed" appraised value of the property with a first mortgage, rather than a second mortgage, HELOC, or other more costly financing method.Funds can be used for repairs or renovations that are permanently affixed and add value to the property.

The Numbers-Mortgage                                $ 388 monthlyProperty Taxes                      $ 885 yrInsurance                               $ 670 yrProperty Mgmt (9%)             $ 1,080 yrMaintenance & Repairs       $ 600 yrHOA dues                               $ 400 yrCapital Expendatures           $ 720 yrVacancy (7%)                          $ 903 yrRent                                        $ 1075 monthlyTotal Cash Flow                    $ 249 monthlyLiving Expenses/Savings- The Park Model home was purchased with a HELOC @ 6% interest only on a 12yr AM from another investment property.

The Numbers-Mortgage                                $ 388 monthlyProperty Taxes                      $ 885 yrInsurance                               $ 670 yrProperty Mgmt (9%)             $ 1,080 yrMaintenance & Repairs       $ 600 yrHOA dues                               $ 400 yrCapital Expendatures           $ 720 yrVacancy (7%)                          $ 903 yrRent                                        $ 1075 monthlyTotal Cash Flow                    $ 249 monthlyLiving Expenses/Savings- The Park Model home was purchased with a HELOC @ 6% interest only on a 12yr AM from another investment property.

How would I go about using a HELOC on my house as a down payment for a rental?

Unfortunately I've just discovered that when I got a heloc on it 2 years ago the bank apparently over-valued it significantly -- almost double its current FMV.

I want to get a HELOC but I don't want to be drowning in debt if the value of my home drops 40% like in 2007-2009.

Suppose a have a large heloc on my primary residence.