How Much Does It Cost to Install a Furnace? (2023)

By Amanda Lutz

Mar 03, 2023
hvac filter replacement home central air system. servicemen changing filter in furnace. Change filter in rotary heat exchanger recuperator.

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The cost of a new furnace can range from $2,807 to $6,783 with an average price of $4,696.* Most homes use a forced-air furnace system to provide heat in the colder months. These furnaces burn fuel, typically gas or oil, to heat air and then push the warm air through a building’s ductwork. Furnaces can last up to two decades, but eventually, they begin to wear out. When this happens, it’s a good idea to look for a new, high-efficiency model that burns cleaner energy and lowers utility bills.

We’ll break down the cost factors and other important information below.

*All cost data via HomeAdvisor, Fixr, and HomeGuide.

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How Much Does Furnace Installation Cost?

Where your furnace replacement cost falls within the above price range depends on the unit’s size, type, and efficiency. As you might imagine, larger, more efficient furnaces cost more.

Cost by Size

The size of a furnace is determined by how much heat it can produce, which is measured in British thermal units (BTUs). Most residential furnaces have BTU ratings of 40,000 to 120,000.  

The furnace size you need largely depends on your home’s square footage. Bigger isn’t always better, since a furnace system that’s too large will work inefficiently, wasting fuel and money. Typically, you’ll multiply the square footage of the space by 40 to determine how many BTUs of heat your home needs. Keep in mind that you may need a little less in warm climates or a little more in cold climates.

Here’s how furnace prices break down by size.

Square Footage of HomeBTUs NeededFurnace Cost













Cost by Type

The type of furnace refers to which kind of fuel it uses to create heat. Natural gas furnaces are the most common, but there are also furnaces that rely on electricity, propane, or heating oil.

Electric Furnaces

Electric furnaces use electricity to heat wire coils within the furnace unit. A blower then moves air over those coils, heating it and sending the heated air through the ductwork to the rest of the house. Although electric furnaces are very energy-efficient, they take a lot of power to run and are slow to heat an entire home. Thus, they’re most common in areas that don’t experience extreme winter temperatures. They’re also relatively inexpensive to install, costing $1,600 to $6,900, including materials and labor.

Electricity can also be used to run a heat pump, a different type of home HVAC system that provides both heating and air conditioning. Instead of creating heat like a furnace does, these heating and air systems maximize energy efficiency by transferring existing heat outdoors in summer and indoors in winter. An electric air-source heat pump costs $4,500 to $8,000 to install. Heat pumps that use renewable energy sources like geothermal heat cost substantially more.

Natural Gas Furnaces

Most residential furnaces in the United States burn natural gas, which provides a good balance of cost, efficiency, and power. At $3,800 to $10,000, natural gas furnaces cost a little more to install than electric furnaces, but they’re more cost-effective to run, particularly if your home already has a gas line. The gas itself costs less than other fuel types, and many high-efficiency furnaces run on gas.

Propane Furnaces

If you want the benefits of a gas-fired furnace but don’t have access to a municipal gas line, you can install one that runs on propane instead. These typically cost $3,000 to $6,000, but you’ll also need to install a propane tank if you don’t already have one. This can cost anywhere from $700 to $4,700 for an aboveground tank and $1,500 to $8,150 for an underground tank. Propane prices fluctuate, and you’ll need to set up propane delivery from a local company to keep the tank full.

Oil Furnaces

Furnaces that run on heating oil used to be more common, but they’ve become less popular as the price of oil has risen. Burning oil is also less efficient, wasting some heat as exhaust, and it produces a good deal of soot. You can still find oil furnaces in homes in the northeastern United States where winters are harsh, and some of these furnaces can be retrofitted to burn biodiesel or other renewable types of fuel oil. Oil-fired furnaces typically cost $6,750 to $10,000 to install.

TypeCost Range





Natural gas




Cost by Efficiency

A heating system’s energy efficiency is measured by a metric called annual fuel utilization efficiency (AFUE). A furnace’s AFUE rating shows what percentage of the fuel consumed is turned into usable heat energy. A perfectly efficient system would have a rating of 100%. Electric furnaces can reach this high: They all have efficiency ratings between 95% and 100%.

Furnaces that burn oil, gas, or propane must vent exhaust to prevent toxic gasses like carbon monoxide from building up inside the home. Inevitably, some heat escapes with the exhaust, decreasing the system’s energy efficiency. Older, low-efficiency systems can have AFUE ratings as low as 56%, but the U.S. Department of Energy currently requires all new furnaces to have an AFUE rating of at least 80%. Anything over 90% is considered a high-efficiency furnace, and some gas-burning units can reach ratings of up to 98.5%.

High-efficiency models have a slightly different design than other furnaces. Fuel combustion takes place in a sealed chamber, so less heat is lost, and the exhaust gasses pass through a second heat exchanger to further reduce loss. High-efficiency furnaces have an easily visible Energy Star label. They can cost as much as 50% to 100% more than lower-efficiency models up-front, but you’ll save money on your utility bills in the long run.

Simply subtract the AFUE rating of your old furnace from that of your new furnace to determine your savings. For example, if you switch from 76% efficiency to 95% efficiency, you’ll save 19% on your energy bills going forward.

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Additional Cost Considerations

Size, efficiency, and furnace type are the most important price variables, but the factors below can also affect the total cost of your project.


Most major furnace manufacturers create multiple product lines, from budget to high-tech models. However, some brands are pricier than others. Note that not all brands make furnaces for every fuel type. Also, different brands offer different warranties, so make sure you read the fine print if a manufacturer’s warranty is important to you.

BrandUnit Cost









American Standard






Fan Motor

If your furnace doesn’t need replacing but you want to improve efficiency, you can often upgrade the system’s blower motor.

Single-stage motors are the least expensive ($100 to $500), but they’re noisy and inefficient because they run at the same high speed no matter what the system needs. Two-stage motors ($120 to $700) are more efficient, as they can switch to a lower speed when possible. Finally, variable-speed motors ($400 to $1,100) are the quietest and most efficient, as they can run on the minimum energy necessary to keep the home’s temperature constant.

Check with a professional to ensure the fan you want will work with your current furnace.

Installation vs. Replacement

Replacing an old furnace typically costs less than installing a new one, particularly if you’re replacing your furnace with one of the same type and approximate size. If the HVAC contractor doesn’t need to modify your existing gas lines, flue, or ductwork, labor costs will be lower. If you’re installing a brand new furnace or converting to a different type, more work will need to be done. Here’s how that affects your total project cost.

Labor Costs

Labor costs account for 20% to 30% of the total furnace installation cost. This percentage will be lower for electric furnaces but higher for oil and gas furnaces, particularly if you need new lines or fittings. Anything that increases the project’s difficulty or time will also increase installation costs. HVAC contractors typically charge $50 to $100 per hour to install a furnace, and the process can take four to 10 hours.


Most places in the United States require a building permit to install a new furnace. This includes a professional inspection, which will ensure that your new heating system is up to code and safe to use. These permits usually cost $75 to $100, but this varies by location. Check with your local building department to find out what permits you need.


Removing and disposing of your old furnace is typically included in the cost of hiring a professional. Furnaces are heavy, complicated pieces of machinery, and they must be hauled away and disposed of properly. If your contractor charges separately for this, you’ll usually pay $50 to $200.

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How to Know When It’s Time for a New Furnace

You should opt for furnace repair over replacement when possible. Homeowners pay an average of $311 to get their furnaces fixed. However, even the best furnace won’t last forever. Here are some signs it’s time to replace your furnace.



Professional vs. DIY Furnace Installation

Furnace installation is a complex project that’s not recommended for even experienced do-it-yourselfers (DIYers). Furnaces and their fittings must be able to handle high temperatures and, in the case of gas and oil furnaces, flammable materials and toxic exhaust. Installing any of the connections incorrectly could create a fire hazard or a source of lethal carbon monoxide.

HVAC contractors must be highly trained and licensed to offer their services. Professionals have specialized knowledge, equipment, and tools that allow them to get the job done quickly and safely. They know which permits to get and how to install everything so that it meets state and local building codes.

By refusing professional installation, you risk damaging your home’s structural integrity and the health and safety of everyone who lives there. At the very least, you’ll void your new furnace’s warranty. Be sure to include the price of labor when budgeting for furnace installation.



How to Reduce Furnace Installation Costs

Even when hiring a professional, you can still reduce costs by following these tips.



Our Recommendation

When buying a new furnace, take time to understand how furnaces are sized and which size is right for your home. If you’re replacing an old furnace, you’ll probably look for one that uses the same type of fuel, but it’s a good idea to upgrade to a high-efficiency model to reduce your heating costs and environmental impact. Finally, hire a licensed professional to install your new furnace, which will preserve your family’s safety and ensure you get many years of use.

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Furnace Cost FAQ

How much is a furnace for a 2,000-square-foot house?

A furnace for a 2,000-square-foot house should produce about 80,000 BTUs of heat. A furnace of this size costs $2,600 to $4,200.

What is the life expectancy of a furnace?

The life expectancy of a furnace is 15 to 20 years with proper maintenance and regular service.

How long does it take for a furnace to be installed?

The total time to install a furnace depends on several factors, such as the unit’s size and difficulty level of installation. The job usually takes a professional four to 10 hours from start to finish.

Can I get tax credit for installing a new furnace?

If you install a gas furnace with an AFUE rating of 97% or above or an oil furnace that runs on biodiesel, you may be eligible for a 30% federal tax credit of up to $600. You can also check for state and local tax rebates for high-efficiency furnaces.