How Much Does a Furnace Cost?

Cost by type of furnace

Natural gas, electric and oil are the most popular types of furnaces. However, those in more rural areas may use propane to heat their homes. Which one works best for your home depends on several factors, including your location, price range and square footage.

According to the Energy Information Administration (EIA), about 45% of U.S. homes rely on natural gas for heating, while 43% use electricity. Electricity dominates primarily in the South, where winters are mild. In areas with cold winters, such as the upper Midwest and Northeast, propane (5%) and heating oil (3%) remain the primary fuel sources.

You can request a free consultation with Home Depot or Lowe’s to pinpoint the fees associated with your particular situation.

Natural gas furnaces

Most people in the U.S. have gas furnaces. Though the upfront cost of a gas furnace tends to be higher than for other types of furnaces, its fuel efficiency lowers long-term costs (especially compared with oil furnaces). You can expect to pay $3,000 to $10,000 to install a gas furnace.

“Gas furnaces are typically warmer than electric ones. But electric furnaces are 100% efficient, versus the maximum 90% efficiency gas furnaces offer,” said Dariush Jamasb, owner of Air One Tech, an HVAC contractor in northern Virginia. “Apples to apples, gas furnaces also last longer than electric ones.”

Electric furnaces

If you’re searching for environmentally friendly utilities, electric furnaces are the way to go. Because they don’t burn fuel, they’re a cleaner energy option than gas and oil equivalents. At $2,500 to $7,000 with installation, many electric furnaces are also cost-effective.

Electric furnaces can be costly to run, though, and these costs can add up over time in particularly cold areas. This is why they tend to be more popular in the South, where winters are milder.

Oil furnaces

An increasingly less common option, oil furnaces are considered outdated due to lower efficiency ratings and more expensive installation costs. You’ll also have to contend with the fluctuating price of oil.

If your home isn’t connected to natural gas and you live in a cooler region, an oil furnace may be one of your only options. The upfront payment for an oil furnace typically ranges from $4,000 to $10,000.

Propane furnaces

Propane furnaces are more common in rural areas without easy access to other heating sources. A new propane furnace plus the tank will have high upfront costs, ranging from $3,000 to $12,000. You’ll be on the higher end of this range if you need a larger underground tank.

Although propane has lower monthly costs, it’s less efficient for heating and requires more maintenance.

Furnace unit vs. labor cost breakdown

The cost of your new furnace unit will usually account for a smaller share of the total cost than labor and installation. Labor often costs more than the furnace itself because installation is complex and requires licensed professionals to ensure safety and proper system operation.

Labor fees vary by area, so check quotes from local HVAC companies to get the most accurate estimates. Teaming up with professionals near you can also help you better assess what type and size of furnace will fit your home.

For example, a furnace installation for a Chicago homeowner might start at $2,400, while someone in New York City might spend at least $3,500. These figures may increase if you need an old furnace removed or new gas lines and ductwork installed in addition to the furnace.

Here’s a breakdown of unit vs. labor costs for different types of furnaces.

Furnace cost factors

Jamasb explained that furnace costs vary based on the brand, efficiency, included features (such as variable-speed motors) and the unit’s size, measured in British thermal units (Btu).

Efficiency (AFUE)

Annual fuel utilization efficiency (AFUE) is a measure of how efficient a furnace is at converting energy into heat. High-efficiency heating systems have an AFUE between 90% and 98.5%, according to the Department of Energy.

Ultimately, the number will affect your monthly bill. Don’t forget to factor in your climate. If you live in a frigid zone, you’ll likely save money with high-efficiency models, but if you live in a hotter area, you probably don’t need to crank the thermostat as often.

Size

As you’re furnace shopping, you’ll see most furnaces scale from 40,000 to 120,000 Btu. The size of a furnace indicates how much space it’s able to heat, so you’ll need to figure out how big your house is. Multiply your total square footage by 40 to determine the output of a new furnace in Btu.

Brand

The variation in furnace pricing and reliability also depends on what HVAC brand you select. Popular brands include Lennox, Trane, Goodman and American Standard. Installation cost, the machine’s lifespan and any noise-reducing features all affect the price you pay. Some brands also offer generous warranties.

“Brand makes a huge difference. I see Trane outlasting most of the other brands out there,” Jamasb said. “Trane heat-exchanging parts are thicker than other brands, and they use only aluminum. That’s a huge help — plus, they’re engineered with a precise welding process.”

Furnace technicians in your area should be familiar with what customers in your area have purchased and be able to provide recommendations. It’s always a good idea to ask your technician why they recommend a specific brand over another.

Ductwork

If you’re replacing the furnace, it’s a good idea to get the ductwork inspected at the same time.

Ductwork has about the same lifespan as the furnace, so it's likely to need repair or replacement. Plus, you’ll enjoy better HVAC efficiency. For repairs, expect to pay $200 to $700. For replacements, the cost is around $1,400 to $5,600. Other factors that affect price include the length of the ductwork, the location within the house, insulation and the type of duct.

Converting fuel source

If you’re interested in switching fuel sources, you can expect to pay much more, as extra work is required. Switching to oil or propane means you’ll need to factor in the cost of a tank. Switching to gas means installing gas lines, while moving to electric may require an electric panel upgrade.

Permits and code requirements

Installing a furnace usually requires local permits to ensure the system meets safety and building codes. The process typically involves submitting an application, paying a permit fee and scheduling inspections once the work is complete.

Permit fees for ductwork repairs and replacements range from $50 to $500, while permit fees for a new furnace can be as high as $250 to $1,500.

Permits help verify that gas, propane or electrical connections are installed safely and that venting and ductwork comply with local regulations. Noncompliance can lead to fines, failed inspections or insurance issues in the event of damage or accidents.

Old furnace removal

When replacing a furnace, removing the old unit is an important step. Most contractors include removal and disposal in the installation quote, but it can also be itemized separately. Proper removal prevents damage to ducts or vents and meets local disposal regulations. Typical costs are as follows:

• Standard removal and disposal: $50 to $300
• Large or oil-fired furnaces: $200 to $500, depending on weight and complexity
• Additional fees may apply for disconnecting gas, oil or electrical connections

» PROTECT YOUR INVESTMENT: Best home warranties for HVAC

Furnace replacement vs. new installation cost

The cost of installing a furnace can vary significantly depending on whether it’s a replacement or a first-time installation.

Replacing an existing furnace is usually less expensive because much of the infrastructure, such as ductwork, vents and electrical or gas connections, is already in place. Labor may also be simpler and quicker, reducing overall installation costs.

A new installation, on the other hand, requires extra steps and equipment. Because of this, it can easily exceed a replacement by $1,000 to $2,000 or more, depending on home size, furnace type and regional labor rates.

First-time installation involves the following additional work that drives costs higher:

• Installing new ductwork and vents
• Connecting to gas, propane or electrical lines
• Obtaining permits and scheduling inspections
• Integrating with existing HVAC systems or building layouts

When to buy vs. repair a furnace

Though a new furnace can make a dent in your bank account, the good news is that many newer models last up to 15 years. Neglecting maintenance and poor installation can shorten this prediction, though.

“You should have your furnace checked every season — about every six months,” Jamasb said. “With good maintenance, people can generally expect about 13 to 15 years of life from a furnace.”

Experts suggest that spring and early summer are the best times of the year to buy a new furnace due to lower demand and optimal deals and sales. Fall and winter are much busier times of year for furnace purchases, and it is harder to find deals that offer significant savings.

Signs you need a new furnace

Even with routine maintenance, the furnace will eventually need to be replaced. The following signs may indicate it’s time to start shopping for a new one:

• The furnace is making strange noises, such as screeching or banging.
• The furnace is more than 15 years old.
• There isn’t even heating throughout the house — you notice hot or cold spots.
• You’ve noticed a sharp increase in your energy bills.
• The furnace seems to be running constantly throughout the day.

Once your furnace becomes inefficient due to airflow restrictions, it will work harder to heat your home, leading to a spike in monthly utility bills. At that point, it’s usually worth buying a new furnace to avoid higher bills or frequent repairs.

Other extreme circumstances, like carbon monoxide leaks, call for immediate replacement. Signs of carbon monoxide include a yellow flame rather than a blue one, excess moisture on windows and walls, soot surrounding the furnace and homeowners experiencing nausea, lightheadedness or other symptoms of hypoxia.

When to repair your furnace

If your furnace is on the fritz but still fairly young, you might consider repair rather than replacement. A machine under 15 years old that requires a repair probably doesn’t need to be tossed out, especially if the repairs are 50% less expensive than a replacement.

Low airflow, water leaks and thermostat updates are common repairs that aren’t considered severe, while a bad heat exchanger will likely need to be replaced entirely.

How can I save money on a new furnace?

If you’re looking for ways to trim expenses, some states offer tax credits and rebates if you select an eco-friendly furnace. Look for Energy Star-certified products and use green energy sources to offset the hefty price tag. Savings differ depending on where you live.

Tax credits

Homeowners who buy and install high-efficiency natural gas or oil furnaces after Jan. 1, 2023, may be eligible for a federal tax credit. You can get a credit of up to 30% of your project’s total cost, with a $600 maximum credit. In order to receive this tax credit, choose an ENERGY STAR-certified furnace.

» MORE: What’s an energy-efficient mortgage?

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