Heat Pump vs. Furnace Cost: 6 Considerations That Affect How Much You’ll Pay

When considering heating and cooling options, homeowners will notice that there are two popular choices: a heat pump system and a furnace heater. Comparing heat pump vs. furnace costs can help homeowners make an informed decision for their home—one that fits within their budget. Each system has advantages and considerations, and an understanding of the financial aspects is crucial when homeowners are deciding on an HVAC system.

Heat pumps, particularly electric heat pump systems, are known for their energy efficiency. They work by transferring heat from one place to another, making them highly effective for both heating and cooling a home. While the initial heat pump installation cost can be higher than that of a traditional furnace, the long-term savings on energy bills can make up for it. Heat pump air conditioners are often bundled into these systems, providing year-round comfort.

For homeowners who are considering furnace replacement costs, there is a different set of factors to think about. High-efficiency furnaces are known for their reliability and effectiveness in providing consistent heat. Gas furnaces are a popular choice due to their efficiency and lower operational costs. In addition to the furnace install cost, ongoing furnace maintenance can add up over time.

It’s important for homeowners to note that the choice between a heat pump and a furnace may also depend on the climate. Heat pumps are generally more efficient in milder climates, while furnaces, including wood-burning furnaces and gas options, work the best in colder regions.

When comparing heat pumps and furnaces, it’s essential for homeowners to consider their specific needs, climate, and long-term savings—possibly with the help of a pro. While heat pump systems may have a higher installation cost, they offer energy efficiency and year-round heating and cooling capabilities. Furnaces are known for their reliability, but they may require more maintenance and have different operational costs. Ultimately, the decision will need to align with a homeowner’s comfort preferences and budget considerations.

1. Heat pumps have a higher up-front cost than furnaces.

The best heat pumps have a higher up-front cost when compared to the cost of furnaces. This cost disparity is one of the primary factors that homeowners will need to consider when deciding between these two types of HVAC system.

Heat pump systems are versatile and energy efficient since they can both heat and cool a home. Their initial cost includes not only the price of the heat pump unit itself but also the installation expenses, which can be relatively high. The complexity of heat pump installation, including the need for outdoor and indoor units, refrigerant lines, and potentially supplemental heating elements in colder climates, contributes to the higher initial investment. There are two kinds of heat pumps: ground-source and air-source. Ground-source heat pumps, also called geothermal heat pumps, are the more efficient of the two. They function by transferring heat to or from the ground to regulate a home’s temperature, providing effective heating and cooling regardless of weather conditions. This ensures that homeowners can maintain a comfortable indoor environment without excessively high energy bills. The cost of a geothermal heat pump runs from $2,215 to $24,259, with the national average at $13,237. The cost to install a heat pump that uses air rather than ground heat ranges from $4,200 to $7,650, with homeowners spending an average of $5,925. The final price can vary depending on the type and size of the heat pump, materials, equipment, and local labor rates. A gas heat pump is typically used in a commercial setting or in areas where homeowners are living off-grid.

Furnaces, especially traditional gas furnaces, tend to have a lower up-front cost. The cost of a new furnace is generally less expensive than a heat pump, and the installation is often more straightforward. It’s essential for homeowners to keep in mind that the overall cost of a furnace system can vary based on factors such as the type of furnace (gas, electric, wood-burning), its efficiency rating, and any additional equipment required for proper installation and operation. The cost to install a gas furnace ranges from $700 to $10,000, with homeowners spending an average of $2,175. The final price depends on the furnace brand, type, and size; the fuel source; home size; efficiency; and local labor rates. The cost of an electric furnace is $2,114 to $7,706, with the national average at $4,853. The overall price depends on the type and size of the furnace, as well as furnace removal fees and potential ductwork repair. Knowing what size furnace is needed hinges on the size of the house.

While heat pumps may have a higher initial cost, many homeowners look at the long-term benefits, such as energy savings and the dual heating and cooling capabilities, as worthwhile investments. The choice between a heat pump and a furnace will need to be based on a homeowner’s specific needs, climate, and budget. Consulting with one of the best HVAC companies can help homeowners make an informed decision.

2. However, heat pumps are generally more efficient than furnaces, which results in lower energy costs over time.

One of the significant advantages of a heat pump system is the higher energy efficiency, which can lead to lower energy costs over time when compared with the costs of a traditional furnace. Heat pumps operate by transferring heat from one place to another, rather than generating heat by burning fuel. This process is inherently more energy efficient, especially in moderate climates. During warmer months, heat pumps act as air conditioners, and during the cooler months they reverse the process to provide warmth. The efficiency of this heat-transfer process can result in substantial energy savings, as it consumes less electricity or other energy sources to maintain the desired indoor temperature.

Furnaces, while effective at heating, typically consume more energy, especially older or less efficient models. Gas and oil furnaces burn fuel to produce heat, and this combustion process can be less efficient and more costly in terms of energy consumption. A heat pump’s efficiency can be affected by external factors such as extreme cold weather, and the home may require supplemental heating elements, which can potentially impact energy costs.

While heat pumps are capable of maintaining a warm indoor environment during the winter, their efficiency may be compromised in colder climates where temperatures frequently dip below freezing. Ground-source heat pumps are more efficient during the winter months compared with air-source heat pumps. Those living in cold climates may want to consider using a furnace in conjunction with the heat pump. When the weather becomes too harsh for the heat pump to effectively extract heat from the outdoor air, the furnace steps in to provide heating for the home.

3. Heat pumps also have lower maintenance costs than furnaces.

Heat pumps operate by transferring heat from one place to another, which involves fewer moving parts and less wear and tear compared with the combustion process used in many furnaces. Because of this, heat pumps often require less frequent maintenance and few component replacements.

Furnaces, particularly those that burn gas or oil, have complex systems with more components that need regular attention. Gas furnaces, for example, have burners, igniters, and heat exchangers that require periodic inspections and maintenance to ensure safe and efficient operation. Regular furnace maintenance and investing in the cost of furnace repair is essential to address issues such as carbon monoxide leaks and to ensure that the unit is running optimally.

The combustion process in furnaces can create residue and byproducts that accumulate over time, leading to the need for more extensive cleaning and maintenance. This can necessitate homeowners having to pay the cost of a furnace tune-up, or it can result in higher maintenance costs and more frequent service visits.

In contrast, heat pumps have a simpler operation and are less prone to the buildup of combustion-related residues. Routine maintenance typically involves checking refrigerant levels, cleaning coils, and ensuring that all components are in good working order. As a result, homeowners often find that heat pumps are not only energy efficient but also cost-effective when it comes to maintenance. Regardless of the system a homeowner chooses, regular HVAC maintenance is essential to maximize its lifespan and efficiency.

4. A single heat pump replaces two different appliances—a furnace and an AC unit—which could justify the higher cost.

One of the compelling arguments in favor of heat pumps is their dual functionality, which effectively replaces the need for both a furnace and an air conditioning unit. This consolidation of heating and cooling into a single system can help justify the initially higher cost of a heat pump.

• Space savings. Installing a heat pump means a homeowner only needs one unit for both heating and cooling, freeing up space in and around the home. This can be especially beneficial for homes with limited outdoor space for multiple HVAC units.
• Energy efficiency. Heat pumps are known for their energy efficiency in both heating and cooling modes. This efficiency can lead to long-term energy savings compared to running separate heating and cooling systems.
• Simplified maintenance. Maintaining a single heat pump system is generally more straightforward than managing both a furnace and an air conditioner. Fewer components mean fewer potential points of failure and less maintenance overall.
• Year-round comfort. With a heat pump, homeowners can enjoy year-round comfort without the need to switch between heating and cooling systems. This convenience can be especially appealing for homeowners looking for a hassle-free HVAC solution.
• Environmental benefits. Heat pumps are considered more environmentally friendly because they rely on electricity for heat transfer rather than burning fossil fuels. This reduces greenhouse gas emissions and aligns with sustainable and green energy practices.
• Cost savings over time. While the initial heat pump cost may be higher, the savings from not having to purchase and install a separate furnace and air conditioner can offset the expense over the long term.

Ultimately, the decision to invest in a heat pump versus separate heating and cooling systems will depend on a homeowner’s specific needs, budget, and climate. For many homeowners seeking convenience, energy efficiency, and long-term savings, the versatility and cost-efficiency of a heat pump that replaces both a furnace and an AC unit can make it an appealing choice.

5. Depending on the model, heat pumps can have a longer lifespan than furnaces, which means a homeowner’s initial investment will last longer.

The potential for a longer lifespan is another factor that can make the initial investment in a heat pump more cost-effective in the long run when comparing them against the lifespan of furnaces.

• Durability and fewer moving parts. Heat pumps, particularly electric heat pump systems, tend to have fewer moving parts and less wear and tear than furnaces. The absence of combustion-related components in heat pumps means there are fewer components that may need replacement or repair over time.
• Reduced exposure to corrosion. Furnaces that burn fuel, especially in regions with harsh winters, are exposed to combustion byproducts and moisture, which can lead to corrosion and deterioration over time. Heat pumps are less susceptible to these issues, potentially extending their lifespan.
• Proper maintenance matters. Regular maintenance plays a significant role in the lifespan of both heat pumps and furnaces. Because heat pumps typically have simpler operations, they may be easier to maintain, reducing the risk of neglect that can lead to premature wear and tear.
• Manufacturing advances. Advances in heat pump technology and manufacturing have led to more durable and efficient models. Many modern heat pumps are designed to provide reliable service for decades.

6. Homeowners will want to consider whether the higher up-front costs of a heat pump are worth the long-term cost and energy savings, or whether a traditional furnace will best suit their needs and budget.

Homeowners face an important decision when choosing between a heat pump and a traditional furnace. It all comes down to weighing the higher up-front costs of a heat pump against the long-term cost and energy savings, as well as considering their specific needs and budget.

For those living in moderate climates or regions with mild winters, where heat pumps can operate efficiently throughout the year, the initial investment in a heat pump may be a wise choice. The dual heating and cooling functionality, energy efficiency, potential for lower maintenance costs, and the possibility of a longer lifespan can all make the higher up-front cost worthwhile over time. It’s also an environmentally conscious option, reducing reliance on fossil fuels.

Homeowners in colder climates may find that a traditional furnace, whether gas, electric, or wood-burning, better suits their heating needs. Furnaces are well established for their ability to provide reliable heating during harsh winters. While they may come with lower initial costs, it’s crucial for homeowners to consider long-term energy bills, regular maintenance expenses, and potential replacements or upgrades.

The decision between a heat pump and a furnace needs to be based on a careful assessment of individual circumstances. Factors such as climate, local energy costs, available space, and personal preferences all play a role in determining which HVAC system is the best fit.

Sources: Angi (1, 2, and 3), HomeAdvisor