How Much Does Furnace Installation Cost? | 2024 Guide

By Jilli Cluff Updated May 17, 2024

Typical costs range from $2,800 to $6,780.

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Furnace installation costs typically range from $2,800 to $6,780, but most homeowners will pay around $4,670 on average. The cost varies depending on factors such as the size of the furnace, the type of fuel it uses, and its efficiency ratings. Most homes use a forced-air furnace system to provide heat during the colder months. These furnaces burn fuel, such as gas or oil, to heat the air and then distribute the warm air through ductwork. While furnaces can last up to two decades, they eventually wear out and need replacement. In such cases, looking for a new high-efficiency model that burns cleaner energy and reduces utility bills is wise.

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

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Note: Cost data in this article was sourced from HomeAdvisor, Fixr, and HomeGuide.


How Much Does Furnace Installation Cost?

Furnace installation costs typically range from $2,800 to $6,780, but most homeowners will pay around $4,670 on average. 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.

Factor 1: Furnace Unit Size

Determining the right size of a furnace for your home depends on its heating capacity, measured in British Thermal Units (BTUs). Residential furnaces generally have BTU ratings ranging from 40,000 to 120,000. Selecting the right furnace size is crucial to ensure efficient and cost-effective heating.

The size of the furnace you need mostly depends on your home’s square footage, insulation levels, and climate. Here is a simple way to estimate the required BTU output:

  1. Calculate the square footage of your home’s living space, excluding unfinished basements, attics, or garages.
  2. For well-insulated homes in moderate climates, multiply the square footage by 20 BTUs. For older, poorly insulated homes in colder regions, multiply the square footage by 30 to 40 BTUs.
  3. If any exposed walls or large window areas face a cold or windy direction, add an additional 4,000 BTUs.
  4. Factor in any significant sources of heat loss or gain, for instance, vaulted ceilings, fireplaces, or large glass surfaces.

For example, if your home has 2,000 square feet of living space and is moderately insulated in a temperate climate, you would need a furnace with a heating capacity of around 40,000 BTUs (2,000 square feet x 20 BTUs).

We advise contacting a professional HVAC contractor for an accurate assessment. They can perform a heat load calculation, considering factors such as your home’s construction, insulation levels, air infiltration, and local climate conditions. This calculation will help determine the precise furnace size needed to maintain a comfortable temperature throughout your home.

Remember, an oversized furnace will cycle on and off frequently, leading to uneven heating and increased wear and tear, while an undersized unit will struggle to keep your home warm during extreme temperatures.

Here’s how furnace prices break down by size.

Square Footage of HomeBTU’s NeededFurnace Cost Range
750–1,000 sq ft40,000–60,000$2,000–$3,000
1,300–3,000 sq ft80,000–100,000$2,600–$4,200
1,600–4,000 sq ft100,000–125,000$3,000–$4,500
2,000–5,000 sq ft125,000–150,000$3,300–$6,500

Factor 2: Type of Furnace

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

TypeCost Range
Electric$2,000–$7,000
Propane$3,000–$6,000
Natural gas$3,800–$10,000
Oil$6,750–$10,000

Electric Furnaces

Electric furnaces work by heating wire coils using electricity. A blower then pushes air over the coils and spreads the heated air through ductwork. They’re cost-effective, with installation costs ranging from $1,600 to $6,900. Electric furnaces are energy-efficient but can be slow in heating an entire home and require much power. They’re best suited for mild to moderately cold climates, and their maintenance costs are typically lower than those of gas furnaces. However, operating costs can be higher due to the reliance on electricity. Their life span ranges from 15 to 30 years.

Pros

  • Energy-efficient operation
  • Quiet operation
  • No combustion process, reducing indoor air pollution

Cons

  • Slow to heat an entire home
  • Potential for high electricity bills during peak usage periods
  • High operating costs, especially in regions with high electricity rates

Natural Gas Furnaces

Most homes in the United States rely on natural gas furnaces for heating. While more expensive to install than electric furnaces, with an average cost of $3,800 to $10,000, they’re more cost-effective, especially with existing gas lines and lower fuel costs. Natural gas furnaces suit all climates, excelling in harsh winters with faster, more powerful heating than electric models. Operating costs are typically lower, depending on utility rates and furnace efficiency. 

With a 15 to 20 year life span, replacing aging units with high-efficiency models offsets long-term costs and improves energy savings. Natural gas furnaces balance cost-effectiveness, heating power, and efficiency, making them popular in various climates, particularly colder regions. Regular maintenance and safety checks ensure safe, efficient operation.

Pros

  • Faster heating capability, suitable for colder climates
  • Availability of high-efficiency models of up to 98% AFUE
  • Lower operating costs compared to electric furnaces

Cons

  • Higher upfront installation costs
  • Regular maintenance is required for safe and efficient operation
  • Potential safety concerns related to gas leaks and combustion

Propane Furnaces

If you don’t have access to a municipal gas line, propane furnaces offer a viable alternative to enjoy the benefits of gas heating. If needed, propane furnaces cost $3,000 to $6,000, plus $700 to $8,150 for installing an above or underground propane tank. Suitable for mild to extremely cold climates, propane furnaces provide heating capabilities and efficiency similar to natural gas models. 

However, fluctuating propane prices and tank refilling/rental fees may increase long-term operating costs. With a 15- to 20-year life span, replacing aging units with high-efficiency propane furnaces can offset costs and improve energy savings. While upfront costs are higher due to the propane tank requirement, propane furnaces offer comparable performance to natural gas furnaces in areas without gas line access, though evaluating long-term propane costs is crucial.

Pros

  • Similar heating capabilities and efficiency to natural gas furnaces
  • Also features high-efficiency models similar to gas furnaces
  • Suitable for areas without access to natural gas lines

Cons

  • Requires a propane tank and regular refilling
  • Higher fuel costs compared to gas
  • Has extra installation costs for the propane tank

Oil Furnaces

Once popular, oil furnaces have become less common due to rising oil costs. They’re less efficient than gas furnaces and waste heat as exhaust, which produces significant soot. However, you can find them in northeastern U.S. homes with harsh winters. Contractors can retrofit some oil furnaces for renewable fuels such as biodiesel, but the installation costs range from $6,750 to $10,000. They’re well-suited for harsh, cold regions without gas or propane access, but their higher operating costs come from fluctuating oil prices, regular tank refilling, and tank maintenance/replacement. 

With a life span of 15 years, replacing aging oil furnaces with efficient models reduces long-term costs and emissions. Although oil furnaces are a viable option where gas is unavailable, especially in harsh winter areas, retrofitting them for renewable oils can mitigate some drawbacks. Ultimately, weighing higher operating expenses against heating needs is crucial when considering oil furnaces.

Pros

  • Suitable for areas without access to natural gas or propane
  • Powerful heating capabilities for harsh winter climates
  • Can be retrofitted to burn renewable fuel oil

Cons

  • Higher operating costs due to fluctuating oil prices
  • Increased emissions and soot production
  • Requires an on-site oil storage tank

Factor 3: Energy Efficiency

Annual fuel utilization efficiency (AFUE) measures a heating system’s energy efficiency. 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 such as 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 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%. Another great resource for understanding what makes more modern furnaces efficient is to go through ENERGY STAR’s rating criteria for residential furnaces. 

High-efficiency models have a slightly different design than other furnaces. Fuel combustion occurs 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 upfront, but you’ll save money on your utility bills in the long run.

For example, if your home has an average annual heating cost of $1,000 and you replace an old 60% AFUE furnace with a new 95% AFUE high-efficiency model, you could save up to 35% on your heating costs. In this scenario, your annual heating costs would drop from $1,000 to $650, resulting in a savings of $350 per year. Over the typical 15-year life span of a furnace, those savings would amount to $5,250. If the high-efficiency furnace costs $3,000 more to install than a standard model, you’d recoup that additional investment in about 8.5 years and continue to save money for the remaining 6.5 years of the furnace’s life.


Other Potential Cost Factors to Consider

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

Brand

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

BrandUnit Cost
Goodman$800–$1,900
Amana$800–$2,500
Bryant$800–$2,500
Carrier$1,000–$2,500
American Standard$1,200–$3,600
Trane$1,300–$3,600
Lennox$1,300–$4,100

Fan Motor

If your furnace doesn’t need replacing but you want to improve efficiency, you can often upgrade the system’s blower motor. Check with a professional to ensure the fan you want will work with your current furnace.

There are three main types of blower motors:

Variable-speed motors are the best option for several reasons. They gradually ramp up to the optimal speed, using only the necessary power to maintain ideal temperatures, minimizing energy waste. Without abrupt start and stop cycles, variable-speed motors run smoothly at lower speeds most of the time, resulting in significantly reduced noise levels. Running at lower speeds more frequently allows for more consistent air circulation and filtration than single- or two-stage options. While variable-speed motors have higher upfront costs, their improved efficiency leads to lower utility bills over time, making them a worthwhile investment, especially for larger homes that require consistent heating and cooling.

Installation vs. Replacement

Replacing an old furnace costs less than installing a new one, particularly if replacing it with one of the same type and approximate size. Labor costs will be lower if the HVAC contractor doesn’t need to modify your existing gas lines, flue, or ductwork. However, 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 can make up a significant portion of the total expenses involved in furnace installation, ranging from 20% to 30% of the overall cost. However, the percentage can vary depending on the type of furnace and the complexity of the installation process. HVAC contractors usually charge between $50 and $100 per hour for furnace installation labor. The installation process can take anywhere from four to 10 hours, depending on the complexity of the job and any additional work required.

Regarding labor costs, electric furnaces generally have lower costs than gas or oil furnaces. This difference is because electric furnaces don’t need fuel lines or venting systems, making the process relatively straightforward. Gas and oil furnaces, on the other hand, can require more labor-intensive installations, particularly if you need to install new gas lines, oil tanks, or venting systems. In such cases, the labor costs can be higher, potentially accounting for 30% or more of the total installation cost.

Several factors can increase the difficulty and time required for furnace installation, consequently increasing labor costs:

Removal

When you hire a professional HVAC contractor to replace your furnace, the cost of removing and disposing of your old furnace is usually included in the overall price. However, confirming this beforehand is important, as some contractors may charge an extra fee for this service. Heavy and bulky furnaces require specialized tools and expertise to remove and transport them safely. 

Improper disposal of furnaces can also have environmental implications, as they may contain hazardous materials such as asbestos or refrigerants that need to be handled and disposed of according to local regulations. If your HVAC contractor charges separately for removing and disposing of your old furnace, you can expect to pay anywhere from $50 to $200 or more.

Permits

A building permit is necessary in most areas before installing a new furnace. This process involves a professional inspection to ensure the heating system complies with building codes and is safe to use. A building permit typically costs $75 to $100, but this may vary depending on your location. You can verify whether someone has the proper permits under their name by contacting your local building department or visiting their website. Most building departments offer an online permit search tool that allows you to search by the person’s name or property address to check if any permits have been issued. 


Signs You Need a New Furnace

Furnace repair can often be more cost-effective than replacement, provided it’s possible. Homeowners typically pay an average of $311 for furnace repairs. However, even the best-maintained furnaces have a limited life span, and replacement may become necessary in certain situations. Here are some signs that indicate it is time to consider replacing your furnace:

  • Age: Most furnaces have a life span of 15 to 20 years. If your furnace is approaching or exceeding this age range, replacement may be more cost-effective than frequent repairs.
  • Frequent cycling: If your furnace runs constantly or cycles on and off very frequently, it may be overworking and nearing the end of its life span.
  • Humidity problems: If your home develops excessive humidity, mold, or mildew, it could be due to a malfunctioning furnace or improper ventilation.
  • Inadequate heating: If your thermostat is set correctly, but your home still feels too cold when the furnace runs, it may struggle to produce enough heat.
  • Increased dust: An increase in dust accumulation in your home after turning on the furnace could signify a problem with the furnace’s air filtration system.
  • Increased energy bills: If your energy bills have unexpectedly spiked, roughly a 10% to 15% increase, it could indicate that your furnace is operating inefficiently and needs to be replaced.
  • Strange noises: Loud screeching, grinding, or banging sounds from the furnace could be signs of serious mechanical issues requiring expensive repairs or replacement.
  • Uneven heating: If you notice significant temperature differences between rooms, it could indicate that your furnace is struggling to distribute heat evenly throughout your home.
  • Unusual odors: If you notice persistent, unusual odors even after the initial start-up period, it could be a sign of a cracked heat exchanger or other safety issues that require immediate attention.

How Can You Reduce Furnace Installation Costs?

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

  • Consider a home warranty: Home warranty plans that cover your furnace and air conditioning system can provide peace of mind and protect you from the costs of repairs or replacements due to normal wear and tear.
  • Explore warehouse deals: Some warehouse clubs such as Sam’s Club or Costco partner with HVAC companies and offer discounted prices or bundled deals on furnace installations for their members.
  • Look for rebates and incentives: Many manufacturers and installers offer rebates or discounts on energy-efficient furnaces. Additionally, check with your local utility company and state or federal government for any available tax credits or incentives for purchasing high-efficiency models.
  • Negotiate: Don’t be afraid to negotiate with contractors, especially if bundling multiple services or purchasing a high-efficiency system. Contractors may be willing to offer discounts or package deals to secure your business.
  • Opt for high-efficiency models: While high-efficiency furnaces have a higher upfront cost, they can save you money on energy bills in the long run. For example, the federal government offers a 30% tax credit of up to $600 for purchasing a gas furnace with an AFUE rating of over 97% or an oil furnace that runs on biodiesel.
  • Prioritize maintenance: Proper maintenance, including annual inspections and filter replacements, as recommended by the manufacturer, can extend the life span of your new furnace and prevent costly repairs down the line.
  • Obtain multiple quotes: Get at least three quotes from reputable local HVAC contractors. Compare not only the prices but also the services included, warranties, and the contractors’ experience and reputation.
  • Time your purchase: Furnace installation costs may be lower during the off-season (spring and fall) when demand is lower, as contractors may offer discounts to keep their crews busy.

Professional vs. DIY Furnace Installation

Furnace installation is a complicated and potentially hazardous project that DIY enthusiasts shouldn’t attempt. Furnaces and their fittings must handle high temperatures and, in the case of gas and oil furnaces, flammable materials and toxic exhaust. Improper installation of any component or connection could lead to catastrophic consequences, including fire hazards, carbon monoxide leaks, and other life-threatening situations.

Poorly installed furnaces pose significant risks, such as carbon monoxide poisoning, fire hazards, and structural damage to your home. Carbon monoxide is a colorless and odorless gas that can cause severe illness, brain damage, or death. Fire hazards can lead to explosions or fires. Improper installation can also compromise the structural integrity of your home, leading to costly repairs or rendering the property uninhabitable.

HVAC contractors are highly trained and licensed professionals with the specialized knowledge, equipment, and tools necessary for a safe and code-compliant installation. They understand the intricacies of furnace systems, ventilation requirements, and local building codes and ensure the installation meets all safety standards.


Our Recommendation

When purchasing a new furnace, it’s crucial to ensure proper sizing. Calculate your home’s square footage, insulation, climate, and heat loss sources to achieve this. It’s advisable to seek professional assistance to obtain an accurate heat load assessment. Regardless of fuel type, upgrading to high-efficiency models can significantly reduce your heating costs while positively impacting the environment. Consider the AFUE rating, as higher ratings imply greater efficiency and potential savings.

Most importantly, hiring licensed HVAC contractors for installation is essential to ensure safety, longevity, and code compliance. Attempting a DIY furnace installation can lead to fire, carbon monoxide leaks, and structural damage. Professional installation provides peace of mind for safe, efficient operation for years to come.

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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.