On a property you intend to hold long-term, replacing long-term debt with short-term debt makes no sense to me. 

A DSCR (Debt Service Coverage Ratio) loan is exactly that!

Would a line of credit be seen as a debt when the underwriter is reviewing your finances?

If it's truly valued at $400k, you could pull out up to $300k with no tax implications whatsoever (you'd be taking on debt, not incurring a capital gain).With regards to depreciation, engage a great CPA who understand and specializes in real estate investing, and ask them if it's possible to use a cost segregation study to take accelerated depreciation.

Might as well take the slightly higher payment from day one and start paying down the note immediately since your tenants are the ones servicing the debt every month.

How much debt do you have? 

If they did the Government debt would be more unsustainable than it is now.

Our original goal was to buy 5 houses and then debt snowball them, to pay them off.  

The less I put down the larger the debt service but greater roi- correct?  

*newbie forgive me, this is my first tax year.