How Much Does it Cost to Install a Furnace?

Install a Furnace Costs
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Average reported cost:
$4,346
based on 5,353 cost profiles
Most homeowners
spent between:
$3,560 - $5,132
Minimum cost:
$1,200
Maximum cost:
$8,000
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Whether you need to replace a dead furnace or install an entirely new heating system, you're looking at a significant investment. Before you even start shopping for a shiny new furnace, you might consider consulting with a licensed HVAC (Heating, Ventilation and Air Conditioning) professional. Your HVAC pro can look at your particular house - its size, configuration, age - and help you determine the best and most cost-effective way to heat it. The first question to hash out with your HVAC person is the kind of fuel you should use: gas, electric, oil or something else. That decision will have a profound effect on your costs: both up front and over the life of the furnace. Most homeowners stick to whatever their homes already had to minimize the labor. But there could be reasons to change.
Electric Furnaces
Electric is the cheapest way to go in terms of initial costs. Electric furnaces don't require special venting, fuel pipes or storage tanks. They're easy to maintain. The units are small and inexpensive to install. They tend to be fairly safe since there's no fuel combustion involved. And they last a long time - 15 to 20 years on average. Unfortunately, electric furnaces, though more efficient than they were 10 years ago, still are the least efficient alternative and may bring higher heating bills. As with your other choices, generally, the more you pay for a unit, the more efficient your system will be and the more money you can save in the long run. But when you're talking about the cumbersome process of moving electricity from a power plant, along miles of power lines to your home and converting it to heat, the term “efficiency” is relative.
Gas Furnaces
Natural gas furnaces often cost a bit more than electric, and unless you're replacing an existing unit, they come with the added expense of putting in gas lines from the street and building extensive ductwork. But they're usually much more efficient, and that can translate to lower utility bills. A fairly abundant resource in the United States, natural gas has become a relatively inexpensive fuel source. Natural gas furnaces also have the advantage of warming up the home extremely quickly compared to other fuels, so consider that you're not only paying for efficiency, you're paying for convenience and comfort.
Oil Furnaces
When oil was cheap, oil furnaces dominated the market, particularly in the northeastern United States. They required storage tanks. But that gave consumers the option of buying large amounts at one time, getting rid of the monthly heating bill. As oil prices rose, oil furnaces became the dinosaurs of the heating market, and the federal government gave rebate incentives for homeowners to convert to natural gas.
Green Options
Solar panels, geothermal and other environmentally focused heating systems can be investments not only in your home but in a more sustainable planet. Still, consult experts before you buy. You might live in a valley or wooded area without enough sunlight for solar. You might live in a bad region for geothermal? Consider that the upfront costs are high, and at current energy rates, you may not recoup your initial investment, even over the life of your home. But if traditional fuels grow considerably more expensive, these eco-alternatives may start looking like smarter choices.
Furnace Efficiency
Regardless of fuel type, you're going to want to consider how efficient your furnace heats your home. Furnaces all must come with an Annual Fuel Utilization Efficiency (AFUE) rating that spells it out for you. For the most part, higher ratings equate to less fuel consumed. Mid-efficiency furnaces operate at 78% to 80%. High-efficiency furnaces operate closer to 96%. The federal government encourages fuel efficiency by giving the best-performing furnaces their Energy Star, essentially their seal of approval. Gas furnaces with the Energy Star perform at 90% or better in southern states and at least 95% in northern states. Oil furnaces with the Energy Star operate at 85% or better.Paying more for a more efficient furnace will pay off with lower bills. But get out your calculator. Figure out about how much you'll save each month with the more efficient unit. If it'll take more than 10 years to get to your break-even point, you may want to go with a cheaper, less-efficient alternative. Also, consider that efficiency goes beyond the quality of your furnace. You can improve the system's efficiency by sealing leaky ductwork and adding more insulation, which might be cheaper.
Furnace Capacity
Another way furnaces are categorized is by their heating capacity, measured in BTU output. Larger homes and those in colder climes will need higher-capacity furnaces than those in mild climates. But beware: getting a furnace with a higher capacity than you need could ultimately cause uncomfortable conditions, in addition to costing you extra money. Here's where a consultation with a licensed HVAC expert could really come in handy.
Furnace Red Tape
In some municipalities, a permit may be required to install a furnace, and that will add to the cost. You might also need to get it inspected. However, these steps will ensure that everything is done up to code and that your house will be safe.Overall, the project cost will depend on the current set-up of your home and whether you need to repair or install new ductwork. Lastly, make sure to talk to at least three professionals before you start your project. You want to find someone you trust who can help you decide which furnace will work best for your space and needs.