Furnace Replacement: The Homeowner’s Cost Guide

Kenneth Wilson

Suppose you recently noticed a foul odor and odd noises emerging from your heating system, along with the tell-tale sign of a sudden spike in your electricity bills. In that case, this usually suggests possible furnace trouble.

There’s no use in keeping a heating system that doesn’t even keep you warm on cold nights, right? Not to mention, they might even break down every once in a while, due to several problems or old age. It may only turn out to be a significant source of migraines for homeowners at some point.

On average, furnace replacement may cost you $3,500 to $8,100 depending on several factors such as brand, size of your home, and efficiency. However, this estimate does not cover installation and labor costs and fees in securing relevant permits.

Note that the average costs apply to smaller homes (measuring up to 5,000 square feet). It also considers different furnace speeds: single-stage, two-stage, and variable speed. The price may get up to $40,000 or more, especially when opting for geothermal units.

You may also choose furnace models considered standard (mid-range efficiency) and high-efficiency units for that price. Several other factors will either increase or decrease the final price, which we’ll discuss in detail later.

We’re here to walk you through the entire process of HVAC furnace replacement, as well as the total costs incurred to prepare your budget beforehand.

Mid-Range Efficiency Furnace

  • Single-stage: $3,200 - $4,500
  • Two-stage: $4,000 - $5,600
  • Modulating or variable-speed: $4,600 - $5,700

In installing a mid-efficiency furnace, expect to pay somewhere between $1,800 to $2,800. What most people call a mid-efficiency furnace refers to older furnace models. It possesses an annual fuel utilization efficiency (AFUE) rating of 80% to 89%. For your reference, the AFUE measures the maximum heat a furnace may get from the fuel consumed.

Usually, these are vented through a metal chimney or masonry. In most cases, you will need to upgrade your existing chimney if you plan to install a new mid-range furnace.

High Efficiency Furnace

  • Single-stage: $3,700 - $5,300
  • Two-stage: $4,600 - $6,850
  • Modulating or variable-speed: $6,550 - $8,000

High-efficiency furnaces usually cost about $3,500 to $5,500 on average. It generally has an AFUE rating of 90% or higher, with a maximum of 98.5% AFUE. This furnace uses a second heat exchanger to heat the air taken from condensed exhaust gases to get to higher efficiency. Take note that a high-efficiency furnace also needs specialized venting, usually through a vent on the wall with a PVC pipe.

The estimate already takes installation and other relevant fees into account. However, it does not include ductwork, ventilation, or other necessary add-ons– which vary on a case-to-case basis. Consult your local furnace service technician for a thorough home diagnosis.

Some manufacturers or utility companies may offer you incentives, tax credits, or rebates if you're lucky. These may decrease the total cost of your furnace replacement service, allowing you to save a couple of hundred bucks. Refer to the table below for the average replacement costs of different furnace types:

Furnace Type

Average Costs


$4,000 - $10,200


$2,300 - $7,200


$7,000 - $10,200


$10,250 - $40,000


$5,200 - $15,200

  • Gas: A typical gas furnace will cost you around $4,000 to $10,200 on average. This heating appliance primarily runs off natural gas, which is ignited in the furnace before distributing warm air throughout your home.
  • Electric: Electric furnaces are priced at $2,300 to $7,200. This furnace type works similarly to a gas furnace, but it utilizes electricity to produce heat instead. In place of gas burners, they are known to have electric heating elements.
  • Oil:  An oil furnace has an average price of $7,000 to $10,200. It has an added step of oil vaporization which turns into a fine mist with air. The produced heat enters a heat exchanger, distributing heat into the air and raising the room temperature.
  • Geothermal: Perhaps the most expensive furnace type is the geothermal furnace, which may cost you $10,250 up to $40,000. A geothermal heat pump exchanges heat between the ground or water source and the air to heat your home. It is a popular energy-efficient solution for homeowners looking for ways to lessen their environmental footprint.
  • Mini-Split: A mini-split type furnace is priced somewhere between $5,200 to $15,200. This system allows you to adjust the temperature in rooms or individual spaces. It has two primary components: an indoor air-handling unit (evaporator) and an outdoor compressor or condenser.

Factors Affecting Furnace Replacement Cost

Beyond the upfront price of a new furnace unit, there are several other factors every homeowner needs to consider when calculating the total costs. We've listed them down below for your reference.

  • Brand - Several leading brands in the furnace industry have been household classics for many years now. From American Standard to Carrier, Lennox to Trane, the potential options may get overwhelming at some point, with each brand claiming they can provide you with the furnace of your dreams. Going for a renowned furnace brand with a long-standing reputation is always a good choice. They can provide you with high-quality furnaces that many customers have patronized over the years. Should you bump into some furnace trouble, these brands also offer warranties to save you from the additional expenses.
  • Location - According to recent data from Home Advisor, furnace replacement is the most expensive in New Jersey (with an average price of $5,300). Areas such as Montana ($3,200), San Diego ($3,400), and Maine ($3,500) are on the lower side of the scale. You can expect your full running tab to be affected by the location of your home. If you live in the northern states, you will typically require a much stronger heating capacity– causing a spike in your furnace replacement costs.
  • Furnace Speed - In doing online research for your furnace replacement, the term "variable speed" may appear repeatedly. Many technicians advise homeowners to choose a furnace with a variable-speed option, which offers different speed settings. As a result, you can enjoy total control over your heating needs. While this selection may initially cost you more, you can reap off the savings in the long run. Not to mention, your house can use the utmost comfort possible. It's best to think of this one as an investment for long-term gains.
  • Size - Choosing a furnace with the right size for your needs will be easier if you consult a technician to give you a rough estimate. These professionals consider several factors, such as your home's square footage, landscape design, and construction. If you opt for a small-sized furnace, it may not be sufficient in heating your home correctly. A large-sized one beyond what you need may only cause problems in the future, such as short cycling.
  • Labor Costs - The average cost of furnace installation and labor fees may cost $1,000 to $1,500. Generally, the entire replacement process only takes about ten and a half hours in the hands of an expert. A word of caution: it is not something you can do on your own. Furnace installation needs to be done by a professional with enough experience and training. Accordingly, the law requires these technicians to be certified in the industry. Expect to pay somewhere between $200 to $530 for labor fees: $80 to $130 per hour for a licensed furnace technician, which may only add up with extra team members required on-site.
  • Ductwork - In some cases, you may need to have new ductwork installed to accommodate your furnace replacement adequately. It will set you back about $1,800 to $7,300 on average. Do note that the total costs for ductwork adjustment or installation may vary on a case-to-case basis. According to your house's number of stories, ease of access, intake or output vents, temperature control zones, and other siding and wall material, the price may increase. Old homes, in particular, generally have insufficient ductwork to accommodate the airflow of modern furnace units. If you choose to skip having work done on ductwork, this may affect the health of your new furnace and reduce its energy efficiency. Consult a furnace installation professional to find out if your chimney flue also needs a liner. It happens when the existing materials are unable to handle the new system's heat and pressure. Doing so will guarantee your new unit's maximum performance and safety.
  • Electrical Circuit Work - If your technician advises you to move your furnace into a new area, expect to shell out around $530 to $2,300. This scenario may require additional construction to add new electrical circuits to an existing room. Usually, the total price heavily relies on your contractor’s labor fees.
  • Drywall Repairs - Suppose you’re required to conduct new ductwork or electrical circuit work to get your new furnace up and running correctly. In that case, expect to shell out $280 to $830 on drywall repairs and other relevant work to seal the wall after any changes. For some, it may be as simple as patching a small spot on the wall. If there has been an extensive alteration, it may need some more hands-on expertise. Your contractor will most likely consider hole size or difficulty into your total furnace replacement servicing costs.
  • Gas Line and Ventilation - If you're planning to make the jump from an electric furnace to a gas type, you will need to prepare an additional $5,300 to $15,250 for your furnace installation budget. The fee will cover all the necessary ductwork and venting required for your furnace-type conversion. Keep in mind that all vents and related filters need to be routed correctly for your new furnace to function without any problems.
  • Permits and Inspections - Depending on where you live, securing necessary building permits may cost you $430 to $1,800. Sometimes, there will also be an additional $100 inspection fee included. In Washington, homeowners need to secure a mechanical permit or furnace permit as mandated by law. These types of projects are considered a great deal of work that professionals must carry out. Anyone working on a furnace replacement project must be equipped with the proper license to do so.
  • Energy Source - The top choices are electricity, natural gas, and oil when it comes to the most popular fuel sources for furnaces. It's best to research how much these energy sources cost in your area. Doing so will give you an idea of how much you would pay for these particular furnace types. If you're planning to convert to another energy source in your furnace replacement, be prepared for the extra labor fees heavily dependent on your contractor. For areas with cold climates, the powerful heat of gas or oil furnaces proves to be an excellent choice. Maintaining these furnace types, however, may drive the routine upkeep costs higher. It would be best to stay on top of your maintenance for these types of furnaces as they may be dangerous and prone to gas leaks and possible furnace fires.
  • Efficiency - The higher the AFUE rating your new furnace has, the more it uses the amount of generated heat. For your reference, a furnace unit with a 90% AFUE rating loses an average of 10% of the fuel used. Models with high AFUE ratings tend to be more expensive to operate in general. These will also cost more in repairs, given they have more complex pieces than their mid-efficiency counterparts. If you're aiming to lessen your electricity bills, you may be better off settling for a mid-efficiency furnace. Of course, you can always strike a balance between operating costs and energy efficiency by choosing a furnace unit with a 90 to 95% AFUE rating. You can expect the repair costs to be cheaper than high-efficiency furnaces on this one.
  • Warranty Plans - There's nothing more satisfying than having a new furnace with a warranty covered. If your budget permits, we strongly advise going for it. Not only does it give you peace of mind, but it also ensures you that the unit will serve you well for a long time. Fortunately, several furnaces in the market today are offered with a manufacturer warranty. A warranty from the furnace manufacturer is usually good for ten years, as long as you follow the maintenance guidelines to keep its validity. It's best to secure a warranty in writing to avoid any potential dispute in the future. Some local furnace installers may also give you a labor warranty, so it's best to shop around for the best options before signing with one. Most of these labor warranties are made valid for a year.
  • Running Costs - After the upfront costs of purchasing a new furnace unit, you will also need to keep an eye on the running costs of regular maintenance. Typically, you are required to change your air filter once every three months. Depending on your furnace type, some filters may need to be cleaned more often than others. Keep in mind that regularly cleaning your air filter and following regular maintenance can help you save money in the long run. A furnace tune-up will cost you $130 to $170 on average, whereas major furnace repairs may cost you a minimum of a thousand dollars.
  • Furnace removal - If you're lucky, local recyclers may be willing to get rid of your old furnace components on the actual day of removal without a cost. However, if you need the assistance of professional removal services– expect to pay around $90 to $530 for labor fees. The price may increase accordingly depending on the distance of your home to a dumpsite, the ease of parts removal, and other relevant environmental or dumping fees.
  • Supply of Materials - With increasingly hotter temperatures, both homeowners and HVAC contractors alike are continuously affected by the shortage of HVAC units and parts in the market. There is a lack of raw materials such as aluminum, copper, steel, plastics, and semiconductors. As the standard furnace production has been bottlenecked by inadequacy, manufacturers can't produce as many HVAC units as efficiently as before. It's best to prepare to pay higher prices for furnace replacement than you typically would in the past.

Furnace Features: What to Look For?

With so many furnace options available today, choosing the best unit to fit your needs can be a challenging experience. It may likely overwhelm both newbies and experienced homeowners.

Fret not; we’re here to help you narrow down your furnace search! Here are some key features you should be keeping in mind when shopping for a furnace replacement:

Size for Energy Efficiency

Do note that the size of your furnace will affect several aspects, such as furnace efficiency, duration, and house comfort. It's your responsibility to choose the right furnace size that best fits the heating needs of your home. If you choose a smaller furnace than what you need, it will run around the clock and cause a sudden spike in your power bills. You will also generally feel uncomfortable on cold nights as the heating is insufficient.

Similarly, if you choose a furnace that is too large for your needs, it may be prone to a short cycle– and may turn on and off more often than you'd expect. It affects the unit's energy efficiency and lessens its expected lifespan. Remember that no size fits all. Talk to a technician to help you find the best furnace size for your unique home heating needs.

BTU Capacity

Having a furnace unit with adequate BTU capacity is essential to fulfilling the heating needs of your house. Plan 30 to 60 BTUs for every square foot in your living area as a rule of thumb. Adjust it according to your home's age and climate zone.

Depending on the climate in your area, a furnace with 75,000 to 150,000 BTUs is ideal for a standard 2,500 square foot household. Besides this, you will also need to consider the unit's respective AFUE rating.

Load Calculation

First, do a load calculation to find the right furnace for your heating needs. It ensures that your new furnace can adequately provide heating throughout your home.

You will need to consider several factors, such as the home size, type of foundation, location, window type, and other aspects that may affect your current house heating. Though this sounds technical, you can speak to an HVAC professional to do a load calculation for your household. Doing so will help you avoid buying an incorrect heating system size.

A.F.U.E Efficiency Rating

As previously mentioned, a furnace's AFUE rating needs to be a significant consideration before purchasing. The AFUE rating defines the energy efficiency of your unit, particularly at converting the fuel source into heat on an annual basis. It's one point of comparison when choosing between different furnace brands, models, and energy sources.

If a furnace has an 80% AFUE rating, it can effectively turn 80% of the energy in the fuel into heat. The 20% may be lost in the chimney or somewhere else in the heating process.

When doing your furnace shopping, keep an eye out for Energy-Star rated units, as these have been proven and tested to be energy efficient. Consider it a worthwhile investment, primarily if your property is located in an area with harsh, severe winters.

Multi-stage Burners

Your furnace stage burner type (Single-stage, Two-stage, or Modulating furnaces) will give you an idea of how comfortable your home will be on cold nights. It defines the efficiency of a particular furnace unit.

One of the best types to consider for this is the multi-stage burner or a modulating burner. Considered the most efficient choice, it adjusts the flame accordingly to keep a consistent heat distribution in your home while lowering the costs of power bills. However, since a multi-stage burger is a high-end furnace type, it's best to prepare for its expensive price tag.

Programmable Thermostat

If you're wondering about the importance of a programmable thermostat ideal in your new furnace model– it will allow you to adjust your home heating through a pre-set schedule. You can choose to maintain a 72 to 74 degrees temperature throughout the day while gradually shifting to 65 to 67 degrees late at night until early morning.

According to the U.S. Department of Energy, homeowners can save up to 10% on heating costs simply by adjusting the thermostat 7 to 10 degrees from the usual temperature setting for at least 8 hours in a day. A programmable thermostat can help you do this every day, without fail.

Fixed or Variable Speed Blowers

The blower type for your furnace defines how the machine will blow the heated air out in the vents. Similar to the kind of burner, this will also affect your new furnace's energy efficiency and its general comfort when in use.

You can select from 3 different blower types:

  • Fixed speed or single-stage units - With this, you will only choose from two options: on or off. It offers one uniform rate for all your heating needs.
  • Multi-speed blowers - Provides better efficiency, improved airflow, and a quiet operation. This blower can usually accommodate three different speeds (at low, medium, or high).
  • Variable speed - This is the most efficient blower type for your furnace. Similar to how a modulating burner works, it can adjust the amount of air per increment depending on your needs.

Electronic Ignition Systems

An electronic ignition system is commonly found in the latest furnaces on the market. Notably, the feature requires very little power to work. Available in different types, the advanced feature is more energy-efficient than older furnace models. It also has other benefits, such as improved reliability compared to standard pilot lights.

Warranty of Parts

Having a warranty for your new furnace will offer you peace of mind in the long run. You won't have to worry about spending extra expenses on most repairs or defects– as long as the warranty guidelines are still considered valid.

Usually, manufacturer-issued warranties cover 5 to 10 years. It may even be longer if you opt for well-known brands with a long history. In some cases, you can extend the warranty period for your furnace by paying an additional cost.

Common Signs of Furnace Trouble or Failure

Always keep a close eye on your furnace before you find yourself suffering from an inadequate heating unit on cold winter nights. Make it a responsibility to ensure they are operating in prime condition. (Related: Replacing And Repairing Furnaces: How To Keep The Heat Alive Longer) With that in mind, here are some common telling signs your furnace may need to be examined or repaired:

  • Drastic Increase in Electric Bills: If you notice a sudden increase in your energy bills (in comparison with last year’s), take it as a sign to have your furnace checked by a technician. A unit with poor maintenance may turn out to be a common culprit for power bills that skyrocketed drastically. Save yourself from the trouble! Having your furnace serviced will repair all the current issues affecting its energy efficiency.
  • Yellow Colored Pilot Light: The typical light inside your furnace needs to take on a bright, clean blue color. If you notice it’s turning into a yellow hue– chances are, there must have been a possible carbon monoxide leak. Given that it is a poisonous gas that shouldn’t be dealt with lightly, consult your local furnace technician for an inspection as soon as you notice the problem.
  • Odd Noises: Have you recently heard any odd, funny noises coming straight from the furnace? Usually, this may point to potential furnace trouble waiting to grow out of control. For instance, a screw or a piece may have gotten loose inside the furnace. It could lead to much more severe problems in the long run if left overlooked. Have a technician visit for a thorough inspection once your schedule permits.
  • Frequent Dust Build-Up: If you’re a meticulous person when it comes to your home’s cleanliness, a frequent dust build-up near the vents may only be a source of frustration for a long time. It is usually because the filters in your furnace remain unchanged for quite some time now. That said, it might be the right time to have your filters changed. Doing so will improve the air quality inside your home. You’d probably thank yourself for the switch later on.
  • Longer Heating Period: There is nothing more stressful than turning on your furnace on cold winter nights, only to sit and endure the chilly air as the heating system seems to take forever to function. Usually, this points to possible furnace trouble. If your furnace isn’t distributing warm air throughout your home as efficiently and quickly like before, have it examined by the experts!
  • Furnace Start-Up Problems: If your furnace doesn’t start up (or takes forever to start up on that), internal problems may need to be addressed as soon as possible. However, if you want to troubleshoot the issue first before consulting your technician for a home visit, do a simple assessment such as:
  1. 1
    Making sure the thermostat is on (heat option)
  2. 2
    Inspect your home’s gas supply by checking your other gas-powered appliances
  3. 3
    See if the furnace fan works well

Furnace Replacement Project Process

Are you curious to know what goes on in a typical furnace replacement project? Let’s take a closer look at the step-by-step process below.

Removing the old Furnace

First, all the wirings connected to the central furnace unit will need to be removed. Your technician will be in charge of removing any electrical wiring, venting lines, ductwork, and all other wires attached to the furnace itself.

Afterward, it’s time to prepare the space for the new furnace installation. It includes cleaning the entire area to make sure it is free of heavy dirt or dust, moving the evaporator coil for the AC unit, and doing some relevant alterations to cater to the new furnace addition. If the size of your new furnace unit is different from the old one, your technician will need to alter the ductwork to make sure the airflow will be consistently smooth.

New Furnace Installation

Once your new furnace unit is set in place, your technician will adjust the placement accordingly. It should be plumb and level before sealing the unit and reconnecting necessary wirings, including the electric and fuel lines.

In some cases, new wirings may need to be installed to ensure the efficiency of your furnace. It is a standard with the latest, modern models available in the market. Though rare, your technician may also advise on installing a new breaker. Note that this varies with every case. Generally, a furnace is placed on an isolated breaker with identical wiring to the old system. Once all of this is settled, the process can then be considered complete.

Benefits of Furnace Replacement

Furnace replacement requires expertise and experience. Some states even require a permit to carry on with such a project. Considering this, it should be in your best interest to contact the nearest furnace service professional near you.

Listed below are the several benefits you can enjoy when hiring a pro to do your furnace replacement:

  • ROI Guaranteed: Sure, the services of a furnace technician will be costly– but if you deal with a recurring furnace-related problem on your own, the costs may even blow up to more significant proportions. DIY tips and tricks on the internet may only delay what is inevitable. The moment you deal with a particular furnace problem, ensure to find a solution instead of a temporary fix. A professional HVAC technician can help you diagnose the issue and fix it before it gets out of control. Should the problem continue to persist, you can still keep in touch with your local professional for their immediate assistance once again.
  • Expertise: Another significant benefit in seeking professional assistance for furnace replacement is the expertise and experience of your technician. You can count on them to get the job done, as they probably handled a similar project one too many times in the past. You can ask relevant questions about your new furnace or other home improvement work to make the most out of this. There is no room for error if you let a professional handle the job for you. If anything, you can rest assured that your new furnace will function efficiently.
  • Saved Time: As the adage goes, time is gold. Not every homeowner has the luxury of time to accommodate an HVAC replacement personally. With that in mind, hiring a professional furnace service will take the load off your shoulders. They will get the job done as quickly as possible. Not only will you save time spent on labor, but you will also save your energy and research when it comes to getting the project done correctly.
  • Safety: A furnace can be a complicated piece of equipment to tinker with. Not to mention, there are several safety risks when handling a replacement project at home. That’s why a licensed professional must do all the furnace work in some areas. Avoid severe injuries and possible damage to your beloved home by consulting with a furnace service technician near you. They can assure you a much safer replacement project!
  • Year-Round Maintenance: Once you notice any issues with your new furnace, you can call and speak with your local HVAC company for their assistance. You can rely on their professional advice regarding the possible actions you may take. They will also do their best to help you fix any relevant furnace replacement issue as soon as possible, especially if they offered a year-long warranty for labor.

Furnace Replacement: Frequently Asked Questions (FAQs)

How long does the Furnace Replacement process take?

For a general estimate, the furnace replacement process may take up to 4-10 hours. However, other factors can affect the installation time, such as the type of furnace being installed, the size of the house, and modifications on electrical and gas lines.

What are the telling signs of Furnace trouble?

If you are having difficulty distinguishing some furnace trouble besides the common signs we've listed above, here are a couple more issues you need to watch out for.

  • Illnesses at home - A poor exhaust ventilation and carbon monoxide leak in the furnace unit may cause you and your family to feel flu-like symptoms regularly. Before you know it, it may turn into a severe health hazard when frequently exposed to high concentrations. Installing a carbon monoxide detector may help you discover the problem before it can cause any harm.
  • Aging Furnace - Fortunately, an old furnace is easy to identify both in its appearance and performance. Some heating systems may still work despite aging, but their efficiency will significantly decline, leading to a high increase in energy bills.
  • Frequent Repairs - If you see yourself often contacting your local repairman to check your furnace, then it might be the time to replace it.

Is there a best time in the year for Furnace Replacement?

The best time of the year to replace your furnace is during spring and fall. Not only do many companies offer discounts during these seasons, but it also provides the ideal weather and temperature to install a new one.

How can I measure the energy efficiency of my new furnace?

The energy efficiency of your new furnace is measured by the Annual Fuel Utilization Efficiency (AFUE) standards. This measurement calculates the amount of energy converted to heat (BTU.) Your system must have 90% or more AFUE for it to be labeled as an efficient or high-efficient furnace.

How long will my new furnace last?

The expected life span of today’s furnace is 16 to 20 years. You might consider shopping for a new one if your furnace reaches this age.

How often should air ducts be inspected and cleaned?

HVAC systems, just like the air ducts, should always be maintained. According to the National Air Duct Cleaners Association (NADCA), air ducts must be inspected and cleaned every 3 to 5 years.

Final Thoughts

With several promising furnace brands in the market, we strongly advise doing your research to see which model works best for your home's heating needs. Sometimes, the furnace unit you see being advertised on TV may not turn out to meet what you're looking for precisely.

Finding the right furnace will help minimize any trouble in the long run. Not to mention, it will also save you a lot of money on costly repairs and maintenance. Ideally, talk to a qualified HVAC professional to figure out the best furnace for your needs. Rest assured, they will also help you maintain it and keep the unit in peak condition for a long time.

Kenneth Wilson
September 25, 2021
Cost Guides, HVAC

Kenneth Wilson

Retired contractor. Currently residing in Southwest Florida. Now in semi-retirement, I write and manage this blog focused on helping home owners make savvy decisions when it comes to finding contractors and getting their projects done. I also operate remodeling design service for homeowners.

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