I assume that you mean $400k in cash, not $400. I am a mortgage editor here but have also worked as a tax accountant in my previous life. As Tim mentioned, this is a complicated matter, depending on your bracket, your credit rating and other factors. The thing to keep in mind is that tax deductions are still just "discounts" on spending. Paying $100 to get $25 back doesn't make sense in many cases (but it does keep places like Las Vegas in business). So your answer depends on what else is competing for that money. An investment that pays more (after taxes) than you'd pay (after taxes) in interest? In that case, a bigger mortgage makes sense, so you can have that money for your investment. But if you have high-interest debt, you should probably pay off those 15% credit card balances and make a smaller down payment on your house. You also want to make sure that your emergency fund is full (3-6 months of expenses, depending on your employment and lifestyle), and that you are taking full advantage of any employer-matching contributions to your 401(k). Finally, there is the "sleep" question. As in, will I be able to sleep at night if I have a mortgage payment to worry about? If the answer is "no," pay cash and don't listen to anyone else. You are the one who has to live with the decision. In my case, I do 20 percent down to avoid mortgage insurance and I invest pretty aggressively in a number of things. But that is only my opinion and my decision -- not that of this site or anyone else associated with it.