Homebuyers

Mark Zuckerburg, Beyonce, and Paris Hilton: Why Wealthy Homebuyers Often Prefer Mortgages When They Could Pay Cash

In 2024, Mark Zuckerberg bought a 387-foot superyacht called Launchpad, complete with a helipad, decompression chamber, and an accompanying support vessel called Wingman. The fleet’s price is estimated at $330 million.

For most people, that’s an unimaginable sum. But for Zuckerberg, CEO of Meta, the purchase amounted to a small fraction of his wealth.

Surely, someone who can buy a yacht with what amounts to pocket change can purchase a home in cash. Yet Zuckerberg has taken out mortgages to purchase homes. So have Elon Musk, Beyoncé and Jay-Z, and Paris Hilton.

It’s not a new trend. Famed investor Warren Buffett took out a mortgage on a California home in 1971, when he easily could have paid cash. The billionaire still recommends homebuyers use mortgages.

Why do these high-net-worth individuals take out mortgages when they could pay cash for their homes? Typically, it’s because they want to use their money to generate additional returns instead of tying it up in real estate.

“When a client has the liquidity to pay cash, a mortgage becomes a leverage tool rather than a necessity,” said James Malatos, founder and private wealth advisor at Harbor View Private Wealth in Atlanta, Ga.

There are other reasons wealthy buyers finance homes rather than pay cash. Here’s what you need to know about the potential benefits of financing a home.

Why many wealthy homebuyers prefer to invest their money

Rather than focusing only on the cost of the home, wealthy buyers often consider whether their cash could earn them more elsewhere.

“If we can borrow at 6.5% on a 30-year fixed [mortgage] and reasonably expect a diversified portfolio to return higher over that same horizon, the [diversified] spread is working in their favor,” said Malatos.

“That freed capital stays invested, compounding across decades rather than sitting locked up in home equity,” he said.

This strategy is very familiar to Blake Zises, a real estate agent at Coldwell Banker Warburg in Manhattan. Zises works with high-net-worth buyers who could pay cash but choose to use mortgages instead.

“Such individuals don’t view a mortgage as a need for financing, but rather as a strategic financial tool,” she said. “This is quite common in the luxury market.”

Instead of putting all their money into the home, they direct it elsewhere.

For example, some put it in the stock market or use it to buy businesses. Others invest in bonds or cryptocurrency.

“The thinking is that invested liquid capital can generate stronger long-term returns than capital tied up in a single illiquid asset, such as a home,” Zises said.

The value of using a mortgage to keep cash liquid

Using a mortgage to keep more cash on hand is attractive to buyers for other reasons.

Having assets remain liquid, rather than tied up in a home, can help cover major expenses and life events. These may include college tuition, weddings, and starting a family. It may also provide a financial cushion if an unexpected expense comes up.

Keeping cash available can also make it easier to take advantage of investment opportunities. For example, you may be able to move quickly on an investment or buy into a business without needing to borrow money or sell stocks.

A home can build wealth over time, but that money may not be easy to access. If you need cash, you may have to sell the home or take out a home equity loan.

The tax advantages of having a mortgage

One reason some buyers finance a home are the tax advantages, such as the mortgage interest deduction. If you itemize your deductions, you may be able to write off the interest you pay on a loan used to buy your home. This may lower your taxable income.

“The mortgage interest deduction is real, but narrower than it used to be,” said Malatos.

You could only deduct interest on up to $750,000 of mortgage debt in 2025. On a high-priced home, only a portion of your interest may qualify.

The deduction only helps if you itemize and your deductions exceed the standard deduction, which is $32,200 for married couples filing jointly in 2026.

Inflation reduces the cost of borrowing over time

When you finance a home with a 30-year, fixed-rate mortgage, the bulk of your monthly payment, the principal and interest, stays the same for the life of the loan. (Your property taxes, home insurance, and homeowner association costs may change, though.)

As inflation rises over time, income typically adjusts upward. But the value of each dollar drops, which makes your debt much easier to afford later on.

For example, a $1,000 mortgage payment might have been considered expensive decades ago when incomes were lower. Today, many people would consider that same payment a bargain because both incomes and home prices have risen over time.

The bottom line on using a mortgage

So should you take out a mortgage even if you could pay cash? If you have that option, the answer likely depends on your goals and what you want to do with your money.

“For some clients, a paid-off home represents genuine peace of mind that has real value,” said Malatos. “For others, the idea of having a low-rate, 30-year loan while their portfolio compounds is simply rational capital management.”