How Much Should a Furnace Installation Cost?

Furnace Installation

Furnace installation and replacement costs on average from $2,796 to $6,746 as of 2022 (according to HomeAdvisor). Installing a furnace is an investment. But the right type and size of system can last 15 to 20 years. There can be a long-term return on investment, especially if your unit is properly maintained. But to address your cost concerns, here is a breakdown of installation costs based on a number of factors.


Average Furnace Replacement Cost by Type


  • Gas Furnace: $3,800 to $10,000 and up to $12,000; add 50% to 100% to the cost for a high-efficiency model.
  • Natural Gas/Propane: $1,000 to $6,000; prices vary considerably by brand, efficiency level, and type. Converting to propane can cost just a few hundred dollars.
  • Oil Furnace: $6,750 to $10,000 or more; fluctuating oil prices affects operating costs.
  • Electric Furnace: Starts at $2,000 and includes heat pumps and geothermal systems; operating costs are higher due to electricity prices and demand.
  • Coal Furnace: $3,000 to $10,000. By comparison, a wood stove heater costs $900 to $3,800 to install and a pellet stove goes from $1,000 to $3,000. Upkeep and maintenance needs are quite high.
  • Green Energy Options: A geothermal heat pump runs, on average, $3,700 to $17,000 (may go up to $40,000 or more), while a split system heat pump can cost $5,000 to $15,000. If installing solar panels for heating, they can run from $17,500 to $32,000. To get your heating system LEED certified, expect to pay $2,000 to $3,500 more.


Other Factors

With furnace installation, there is a lot to think about. Just about every decision you make influences the cost of purchasing and installing the unit, including:



Furnace size is measured in British Thermal Units, or BTUs. The average home (from 1,600 to 4,000 square feet) requires about 100,000 BTUs of heating. On average, a properly sized furnace here will cost from $3,000 to $4,500. For a small home of 700 to 1,500 square feet, a 40,000 to 60,000 BTU furnace will do, which costs $2,000 to $3,000. For larger homes, you’ll need a 125,000 to 150,000 BTU model, which can cost $3,300 to $6,500.

To calculate size, figure about 30 to 50 BTUs per square foot. In addition, the climate zone where your home is located matters. If it’s colder, figure a higher BTU count per square foot in your calculation.

*Spending more on a larger furnace won’t save you money later. If it’s too big, the unit will cycle on and off more frequently, increasing wear and tear and wasting energy. This amounts to higher repair costs and utility bills. Not to mention the variable temperatures that can make your home uncomfortable.



Labor accounts for roughly 20% to 30% of a furnace installation bill. By comparison, the unit itself is anywhere from 50% to 75% of the installation cost. Removing an old furnace may cost as little as $50 if a recycler does the job (some even do it for free), while professional removal can cost up to $500; factors include ease of removal, distance to your local dumpsite, and dumping and environmental fees.



Property inspections are required by most municipalities. Inspection fees can be around $100. A building permit can range in cost from $400 to $1,500 depending on where you live. Keep in mind these are intended to ensure your unit works safely. An important tip—shop around to compare inspector prices and ask your local gas company if it offers free inspections.



Given the latest furnace prices and installation costs, you’ll spend more in New Jersey than in Montana. Also expect to pay higher amounts in Minneapolis, Pittsburgh, or Colorado Springs than in Atlanta, Chicago, or Seattle (per 2022 data from HomeAdvisor).



You could pay as little as $1,200 for a Rheem furnace and around $1,600 for a standard Trane, Carrier, or American Standard model. A standard model from Amana costs around $2,350. Look for high Annual Fuel Utilization Efficiency (AFUE) ratings, parts warranties, heat exchanger warranties, and inclusion of extras such as built-in air cleaners (Trane models include this and are known for quiet performance).



The higher the efficiency, the more you will spend on a furnace. A unit rated 80 to 89 AFUE is standard; and means it is 80% to 89% efficient. Mid-range efficiency is from 90 to 95 AFUE, while high efficiency means a furnace has a 96+ AFUE rating. The cost of a high efficiency unit alone ranges from $2,000 to $3,000.


Extra Costs

Additional expenses when installing, relocating, or converting to a new furnace include:

  • Electrical Work: $600 to $2,200.
  • Gas Line Service: $275 to $825.
  • Gas Line Installation: $15 to $25 per linear foot.
  • Drywall Repair: $300 to $850.
  • Framing: $1,000 to $2,900.
  • Ductwork Installation/Repair: $8 to $12 per linear foot.
  • Return Air Stack: $1,000 to $5,000.

It can cost $2,000 to $6,000 to replace a boiler, while converting from oil to electric heat can set you back from $2,000 to $5,000.

If humidity control is a problem, a furnace dehumidifier can be installed for $1,300 to $2,800 extra. You can also invest in high-end Wi-Fi thermostats, which cost more than the average temperature controller. Two-stage, multi-stage, and variable speed furnaces are higher in cost than standard units. Dual heat exchangers, air filtration, and zoned heating are higher end options to consider as well.


How You Can Save

Carefully selecting the right-sized system will save you over the long run. Improved efficiency also helps save on utility bills. Rebates from local utility companies provide another opportunity to save, while the Energy Star rebate program has created incentives for those who install high-efficiency furnaces in their homes.


Do I Really Need a New Furnace?

You can often save on repairs if your furnace has been well-maintained and is around 10 to 15 years old. Reduced airflow, low thermostat batteries, or a burnt fuse/tripped circuit breaker can usually be easily fixed. Issues beyond that should be checked by a heating professional. They’ll likely recommend replacement if the control module or heat exchanger has failed.


Contact Hays Heating, Cooling & Plumbing

Our certified technicians specialize in heating repair and furnace installation in Phoenix, AZ. We are a family-operated business committed to completing each job on time and within your budget. In addition to award-winning service, we help save with special offers and financing. Call 602-529-3766 to schedule service or a consultation.

About the Author

Chris Hays

Founder of Hays Cooling, Heating & Plumbing

Chris and Stacia Hays, are the founders of Hays Cooling, Heating & Plumbing; a family operated HVAC company in Phoenix founded in 2001 that services both commercial and residential customers. Chris leads a team of certified technicians who have over 45 years of combined experience and has earned and A+ rating with the BBB and a strong five star rating online. Hays Cooling, Heating & Plumbing focuses on providing support to their customers every step of the way, with exceptional service and competitive prices. If you are looking for top-notch air conditioning and heating service, contact Hays today.