I plan to hold and continue to rent out both units, having the tenants pay down principal and interest and continue gaining market appreciation.

Subtract that payment amount from your current principal and interest payment.

Your description is pretty confusing about that.I would be happy to help and assuming I understand what your numbers are, I would use the positive cash flow from 2 rental properties as principal payment for the HELOC.One of the advantages to using HELOC on your primary is that your monthly interest-only payment is low.

However, I'm considering using an 5 year interest only loan rather than a principal & interest FHA loan. 

I currently own 3 doors myself but only 1 of them is here, my principal residence in Abbotsford.

As a Bay Area investor, my guiding principal is that you make money on the purchase.

Here is some information about our situation.Our home value is currently valued at $220,000.The principal on our mortgage is $151,212.

When you borrow $100K 30-year mortgage today, monthly payment is $400 (principal and interest).

Many investor type loans will also allow you to make interest only payments for  a period of time which can be helpful in the event of vacancy to not have to make the full principal  & interest payment. 

Keep in mind that they are utterly ignorant of economic principals and have rose-colored glasses when it comes to tenant behavior.