Get the mortgage....
As a rule (there are exceptions)... put as little down as you can get away with.
The increase in the value of the house will be EXACTLY the same regardless of how much money YOU have in it. Let that soak in.... Thus, over the life of the 15-30 year mortgage, if the house appreciates at a rate greater than the interest rate, then you are making money on money you didn't invest.
If the buyer can afford say a 50% downpayment, the wise approach is to make say a 10% down and invest the other money elsewhere - where it can grow along side of the house value (you'll loose no increase on the house but you will gain elsewhere). Remember too: all that extra money in the down isn't tax deductable, the interest on the mortgage is.
We bought our house 7 years ago. We made a 10% down and a 15 year mortgage at 3.6%. The house has appreciated about $200,000 (conservatively). That's a really good return on our 10% down - a pretty good interest on that money. We would have made not one dime more if we had made a bigger down... and we'd not made money on the money we put elsewhere Meanwhile, we can take the interest off our taxes.... increasing the return still more.
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