How much does furnace replacement cost?

The cost to replace your furnace is determined by two things: the price of the furnace and the labor to install it. We'll cover labor in a bit. For now, let's look at furnace prices.

Furnace prices

The three most common furnace types are gas, electric and oil. When buying a replacement unit, it's fairly common for homeowners to stick with whichever fuel type they currently have. That said, there are benefits and drawbacks to all three.

One of the main drivers of furnace prices is the furnace's efficiency rating, which is a percentage that tells you how well the unit converts fuel into heat. When shopping for a new furnace, look for the Annual Fuel Utilization Efficiency (AFUE). Most modern units have an efficiency rating between 85% and 95%. The higher the percentage, the better – and the more it will cost you. And here's a rule of thumb: If you're going to be in your home for less than five years, an AFUE of 80% is good. In that short amount of time, you likely wouldn't recoup the costs of a more expensive unit. If you plan to stay in your home long term or want to improve resale value, get one that's 95%.

The brand of your furnace also has a big impact on replacement costs. And while all manufacturers claim to have their own distinctive features, for the most part, they're pretty equal in terms of function. And any modern furnace will be far more efficient than whatever 20-year-old unit you're replacing. 

Labor cost to install furnace

On average, HVAC contractors charge around $75/hour nationwide, and typically it takes about a full working day to install a new furnace. That quoted rate may be higher if your current furnace is difficult to get to, extensive ductwork is needed for your new heating system, or if the new furnace is a different size and shape than your existing unit. Labor costs make up about half the price of your total installation cost. 

The three most common furnace types are gas, electric and oil. When buying a replacement unit, it's fairly common for homeowners to stick with whichever fuel type they currently have. That said, there are benefits and drawbacks to all three.

Gas furnaces cost $900-$3,000. They're more expensive than electric and have higher installation costs up front. But they save you money on energy bills down the road because the fuel used to power them is cheaper. Natural gas is currently the most common heating fuel (most new central heating systems use gas), so let's look at how the top gas furnace manufacturers compare:

Electric furnaces cost about $700-$1,100. They are more expensive to run, but they have a higher efficiency rating and do a better job of heating your home.

Oil furnaces are another option, and they cost $1,000-$3,000. They have fewer emissions than gas furnaces and there's no threat of carbon monoxide. But they require the most maintenance and have the lowest efficiency rating. 

You obviously want your new heating system to run as efficiently as possible, so it makes sense to splurge on the highest efficiency rating money can buy, right? Not exactly. If your current furnace is more than 15 years old, it's probably only running at about 60% efficiency. So any new unit is going to save you money on energy bills and do a better job of heating your home.

You don't necessarily need a brand new electric furnace running at 100% efficiency to get the biggest bang for your buck. Here's a breakdown of furnace features that can drive up the price of a new unit. As with any appliance, the more bells and whistles, the more expensive it gets.

Single-stage furnaces have only one setting: full blast. They use full fuel all the time, no matter the temperature outside. Two-stage furnaces change their output depending on how cold it is. In freezing temperatures they run at full capacity, two stages. If it's a little chilly out, they'll just run one stage, saving you fuel and money.

The price difference between the two operating systems is a few hundred dollars. It's money well spent — if your budget allows it. Two-stage furnaces do a better job of removing cold spots and save you more money in heating costs.

Standard furnace blowers usually have four (non-variable) speeds: low, medium-low, medium-high, high. In variable units, the blower will speed up or slow down based on the load on the home and the outside temperature, making them much more cost-effective. Variable units cost anywhere from $500-$800 more than a non-variable unit. It's a nice upgrade, but certainly not a necessary one.

If you need new ductwork on top of your furnace installation, it adds a few more days of labor and an extra $2,000 or so. You don't always have to replace ductwork when you buy a new furnace but if yours is very old, you should have it looked at. The high efficiency rating on your fancy new furnace won't do you much good if your ductwork is in poor shape. An HVAC contractor can perform duct testing to find leaks and give you an estimate of what it will cost to repair or replace.

There are two types of warranties related to your furnace: the manufacturer's warranty and the installation company's. The manufacturer's warranty covers any issues with furnace itself. Your contractor's warranty covers the labor involved to make repairs if the furnace doesn't work properly.

If your HVAC contractor offers a warranty (a reputable one will), be sure to get it in writing, specifying what exactly is covered and for how many years.

The expected life span of a forced-air furnace is between 15-20 years. Furnace repair costs almost as much as buying a brand new one. So if your unit is nearing the end of its expected life, experts recommend you don't spend more than a third of the replacement cost to repair it.

Don't know how old your furnace is? Find the model and serial number and call the manufacturer. They can tell you how old it is and how much a replacement unit might cost.

Have an HVAC contractor perform a load test to determine which size furnace is recommended for your home so you don't waste money on features you may not need.