All the literature I see that gives the pros and cons of purchasing a house all cash versus using a mortgage looks at it as a static equation. They all start and end with the assumption, which I will simplify here to make my point, that you have an amount (we'll say $500,000) that you can either use to buy a house or you can use a mortgage in which case you can then invest the $500k lump sum and earn a return on that which exceeds the interest rate on the loan (adjusting for tax savings of deductible mortgage interest) and therefore a mortgage is better. OK, but what they don't look at is the fact that with the loan you will have an annual P+I+Insurance debt service of $37k a year (15 year loan) to $21k a year (30 year loan). If you don't have the loan then you can invest that $37k each year, every year for the next 15 years. **Use an investment return calculator and at 15 years the returns more or less wash on the one-time lump sum and the annual investment scenarios.** Increase the time span and the annual investment actually exceeds the one-time investment because all the interest you are not paying is additional capital that gets invested. I get that you "may" also benefit from an interest rate play with a fixed payment loan and that with leverage from a mortgage you are putting less of your money at risk should housing go south, but just looking at this from the investment perspective, why does the literature not account for the investment returns you can otherwise make off the debt service you won't have to pay? Do they just assume people will spend the savings on fancy cars and vacations? Or perhaps I am missing something.

Your loan rate and stock return rate should not be the same. If your loan rate is 3.5% and the average return on the stock market is 7%.

Assuming you have to put 20% down (doesn't matter though).

Investing 400000, into VTSAX for 15 years will net you $1,103,000, while paying off 400,000 of a mortgage will cost you $270,000 in interest at 3.5%.

In 15 years, you would have $1,103,000 plus a paid off house worth approx 600k or $1,700,000.

If you bought the house with cash and invested 37k/year (producing $977,000) with paid off house worth approx 600k, should net about $1,577,000.

$130,000 difference for 15 years. For 30 years, you would see a 7 figure spread.

Stocks are about time in the market, the longer they play, the more they compound. Real estate is about protecting a dollar over a life time, except the last mortgage payment costs considerably less than the first after inflation. Debt service doesn't matter when the compounding interest from investment return (stocks) is better than another (low rate mortgage).