Is it time for a new furnace?  If you’re like most homeowners, you struggle with this question until it becomes painfully obvious and you have no other choice but to replace it.  Here’s how to look into the costs of buying and installing a new home furnace, including the costs associated with disposing of the old system.

What’s Your Furnace Type?

The first thing you need to do is consider what type of furnace you want installed.  In the past, there are two basic types: electric and gas.  But, between the last 15 and 20 years, most of the options that exist today didn’t exist back then.

The most common type that’s installed in residential homes is natural gas-powered.  They cost between $2,500 and $15,000.  Oil furnaces are still available in some states, but they’re rare and less efficient.  They can cost between $2,000 and $8,000.

Electric-driven furnaces may only cost between $1,000 and $2,000 to install, but this type of furnace isn’t very good for heating large square footages since electric heat tends to be expensive.

A newer option is a heat pump, which pulls in heat from either the air or ground and uses refrigerant coils to generate heat or cold air to regulate the temperature of the home.  These newer units can be installed by reputable HVAC contractors for between $1,500 and $7,000.

A ground-source pump costs more than an air-source one — between $7,000 and $25,000, but these can be used as air conditioning units in the summer.

In general, heat pumps cannot operate in extremely cold climates, which limit their use.

Man+Furnace by Steve Rhode, on Flickr.  This work is licensed under a Creative Commons Attribution-NonCommercial-NoDerivs 2.0 Generic License.

Choosing the Right Furnace

Gas furnaces come with a lot of choices which affect price.  For example, heat output varies by model, and is measured in BTUs.  A 60,000 BTU furnace should be sufficient to heat most homes.

Efficiency is another consideration.  Older furnaces were usually rated at 80 percent efficiency.  This means that 20 percent of the heat generated was lost.  New models are rated at 90 percent or higher.  Some are as high as 95 percent efficient.

What Does it Cost to Install?

Installation costs add to the price of the furnace.  Most of the labor on the market today is priced at $75 per hour.  A licensed installer with more experience might charge more.  Apprentices or helpers might cost you $50 per hour.  For an eight hour project, you’re going to pay about $1,000 just in labor.  But, this cost is small potatoes compared to the cost of a non-functioning new unit that was installed improperly.

What Most People Pay

You want facts and figures.  Most people on Angie’s List, and other similar forums, who had HVAC systems installed paid about $5,000 to $6,000 for an installed furnace.  But, this price will vary considerably depending on what type of furnace you’re having installed.

If your furnace only costs you $2,000, then a total installed price of $4,000 to $5,000 might be spot on.  If your furnace alone costs $14,000, you’re going to pay a lot more.

Janet Barnes is a home inspector.  She enjoys writing about her insights online.  Her posts appear mainly on homeowner and DIY blog sites.