How Much Does a New Furnace Cost?

By PropertyClub Team
May 24th 2022
A new furnace can cost between $1,000 and $6,000, depending on what type of furnace you purchase and it's capacity. Electric furnaces are the most affordable, while oil and gas furnaces cost more up-front, but are cheaper to run. You'll also have to consider installation costs, which can run you a couple of thousand bucks.

Installing a new furnace is a moderate expense for the average household. It's not the most expensive type of improvement/repair one can do, but it's also far from the cheapest. This is especially true in cases where the home must be adapted to accommodate the new furnace.

Upgrades to the electrical installation and HVAC system are common examples. However, it's also important to remember that a furnace with a lower upfront cost may end up more expensive in the long run due to maintenance costs. 

hash-markFurnace Type and Cost

Household furnaces are generally organized into three categories according to their energy source: gas, electric, and oil. All three have advantages and disadvantages. Choosing the ideal type for your needs usually involves balancing efficiency, initial cost, and ongoing costs.

hash-markGas Furnace Cost

Gas furnaces are more expensive initially, but they make up for that with lower running costs and maintenance requirements. Typically, you can expect to spend between $1,500 and $6,000 for a new gas furnace as a rough estimate. The exact price will depend on factors like the efficiency and size of the unit. Unfortunately, this option will be unavailable to you if no gas provider services your area.

hash-markElectric Furnace Cost

An electric furnace is the best option if you're looking to minimize your upfront costs. Some models cost less than $1,000, while high-end electric furnaces cost around $1,500. Together with the installation and additional costs, you're looking at around $3,000 - $4,000 in most cases.

However, keep in mind that an electric furnace can get quite expensive in the long term. This is because it draws a lot of power, even for heating a small-sized home. Recent trends in electricity prices have worsened the situation for owners of electric furnaces. Of course, if you can afford to spend more to keep your furnace running, this point will be irrelevant to you. But if you're looking to optimize your household's expenses, you might want to look into gas or oil models instead. 

hash-markOil Furnace Cost

Oil furnaces provide a reasonable middle ground between the other two options. They have a moderate upfront cost – around $2,000 - $5,500, including installation and additional work – and their running costs aren't as high as those of an electric furnace.

Even though it's cheaper to run an oil furnace than an electric one, gas is still the cheapest option. If gas isn't available in your area and you don't want to spend a lot on your new furnace, oil is usually the best choice. If you spend a bit more on a higher-end model, this can cut down on your maintenance costs.

hash-markHeating Efficiency and Compatibility with Existing Systems

Furnaces are also rated according to their efficiency. This is an important factor to pay attention to if you want to minimize your long-term costs. A more efficient furnace is usually more expensive upfront but can minimize your energy consumption down the road.

There's a legal minimum that manufacturers must observe – it's currently at 80%. This means that even the cheapest models on the market won't fall below this level. Still, going above 90% is a good idea if you can afford it. That 10% difference might not seem like much, but it will add up fast as you use the furnace over a couple of years.

hash-markNew Furnace Installation Costs

If you're not planning to install your furnace yourself, you should account for additional installation costs in your calculations. Those can be expensive – in some cases, more than the furnace itself. Gas furnaces are usually the most expensive in this regard. You can expect to pay up to almost $2,000 in some cases, depending on the furnace model and specific details related to your home.

Electric furnaces require little work in comparison, and their installation is correspondingly cheap. This further solidifies their position as the option with the lowest upfront costs. However, remember that you'll pay for this convenience down the road as your furnace will cost more to operate. 

Home Repairs

Depending on the layout of your home and where you want to install your furnace, you might also have to perform some repairs once you're done with the installation. The original installation plan won't always cover these. If you're hiring professionals to handle your installation, discuss this with them in advance. You don't want to be left with any unpleasant surprises like an entire section of your drywall that needs to be replaced.

If it turns out that you'll be responsible for those repairs yourself, you'll have to get in touch with a separate team ahead of time to sort this out. It may be possible to handle the repairs on your own if the damage is not too severe. But to stay on the safe side, you should always know who you can hire for that. 

hash-markLong-term Costs

Every type of furnace has different running costs attached to it. The energy source is a major contributing factor, but it's not the only issue you'll need to consider. Cheaper furnaces usually require more frequent repairs. Don't be fooled by the seemingly low cost of individual parts. If you have to replace a few of those through the year, the costs can quickly add up.

hash-markObtaining Necessary Permits For New Furnace

Depending on where you live, you may not be able to just install a furnace without getting the project approved first. Look into the permits required for this type of home modification and start the approval process as early as possible. You should never put yourself in a situation where your entire renovation hinges on the speed of your local government clerks.

Expediting the process might be possible in some cases, but it will add to the project's cost. Therefore, you should ideally have your permit ready and approved before contacting any professionals for the job. 

hash-markCan You Use Your Insurance To Pay For a New Furnace?

If you're replacing an old furnace that was damaged by something beyond your control, you might be eligible for some coverage by your insurance. Remember that this will never cover the full cost of upgrading to a new model. Instead, you will be compensated for the value of the furnace you're replacing and perhaps the labor costs associated with installing the new model. But if you choose to go for a more expensive, modern furnace, don't be surprised if your insurance provider refuses to approve its full cost. You have nothing to lose from trying, though, so it's always worth a shot.

With some careful planning, you can minimize the cost of purchasing and installing a new furnace by quite a bit. You should still set aside at least a couple of thousand for even the cheapest option if you plan to have the installation done by professional contractors. If you can afford to spend more on the initial purchase, it's advisable to stretch your budget as much as you can. This will help you minimize the long-term cost of operating your furnace and maintaining it in good condition.