The property tax bill alone on a $1m cash purchase means you would need to invest another $150-$200k income property just to pay it. On the other hand with the mortgage interest deductible possibly on the chopping block that might be a consideration. A cash purchase will offer you better leverage on negotiating a better price. Why do you have to live in a $1m home? A high price tag does not necessarily mean a better home. You can find some dreadful homes in that price range and some nice ones in a lower price bracket. Your age may also be a factor. If you are older, are comfortable and have opinions on credit markets, an all cash purchase in a low tax state is the simplest route.