I did an exercise to see what would have happened to someone with $1M buying a $500K house in So. CA in 2007 (which is when we sold our house there and moved to a LCOL area).

Scenario A they put down $100K, mortgage $400K. Payment $1900/mo.

Scenario B they pay $500K cash for the house. Contribute $1900/mo to VTSAX.

In both cases they have a $50K emergency fund and the remainder goes in VTSAX.

The $1900/mo comes from earnings. I’m ignoring taxes.

I won’t bore you with the details, here’s the results:

In Feb 2009 – market bottom – A is down 61% of net worth, B is down 40% (assumed house value now $300K, VTSAX 51% drawdown). That’s gut wrenching in both cases, obviously more so when leveraged.

In Sept 2017 A has a net worth of $2.09M, B is $1.98M.

So, leverage paid off, but not by a lot, and only if they could make it through 2009 without doing anything stupid.

Edit: added principal paid off mortgage amount ($88K).