Maybe an issue come closing that may force our loan to be rejected without proof of debt to income ratio on the rental.

I'd also be interested how you'd "wipe away" the debt of the previous house hack with the rent you use (assuming you don't sell these when you move).

The issue apparently is my debt to income ratio. 

A HELOC is immediately added to your debt to income ratio even if you haven't tapped it. 

The house is located in both a historic district (Mills Act) as well as an opportunity zone allowing for large property tax rebates and the elimination of capital gains tax when we sell.

The house is located in both a historic district (Mills Act) as well as an opportunity zone allowing for large property tax rebates and the elimination of capital gains tax when we sell.

Need to look at your debt to income ration so get a broker that gets this.

Here's my situation: House 1: 250k in equity (1 mortgage already on property, primary residence) House 2: 285k in equity (1 mortgage already on property)I don't think my debt to income would allow for another property.

Ways I’ve thought of is assume their debt and allow them to take a second out in their name to take the remaining balance.

So if you want to eliminate the risk you need to increase the cost and pay a contractor that can run the business.