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Essential Facts of Furnace Installation

The decision to install a new furnace is only the first in a long line of choices you will face.

Local code requirements will need to be considered as well as the need to upgrade existing infrastructure to modern requirements. Installing a new appliance is never just about swapping equipment.

Be prepared to encounter several unexpected obstacles along the way.

The good side of this is that you will have a reliable new system supplied by a far safer infrastructure than you had before you began this process.

The improved efficiency over your old furnace will heal your dented wallet and the satisfaction of a job well done is hard to beat.

On Rating Systems

The furnace industry has changed a great deal since we first moved on from wood burning stoves.

There are two that you need to understand when selecting a new furnace to install.


Standing for British Thermal Units, BTU is used both in the heating and cooling worlds of climate control.

The technical measurement for heating, according to the US EIA, is that “it is the quantity of heat required to raise the temperature of one pound of liquid water by 1 degree Fahrenheit at the temperature that water has its greatest density(approximately 39 degrees Fahrenheit).”

For our purposes, this is a measurement of a furnace’s ability to create heat quickly. The higher the BTU rating, the more quickly your home should heat up with all other things being equal.


A furnace’s Annual Fuel Utilization Efficiency (AFUE), according to Energy.gov AFUE “is the ratio of annual heat output of the furnace or boiler compared to the total annual fossil fuel energy consumed by a furnace or boiler.”

Put in simpler terms, the higher the AFUE percentage, the more efficiently your furnace converts fuel into heat. This becomes important because AFUE ratings overlap between furnace types.

You may find that spending a little extra on a gas furnace to achieve a near-equal AFUE rating to an electric furnace will save you from having to switch fuel types and pay dividends down the road.


The load calculation is how many tons of air can be moved through your home in a given amount of time. The larger the home the larger the load. Getting this number right is the most important factor in selecting your furnace.

If you come in under what you need, you will have spots in your home that are slow to heat or cool, if the treated air reaches them at all.

Too much load will cause back pressure creating inaccurate thermostat readings and shut your forced air system down before most of your home has received the treated air. 

Furnace Types

While it is simplest to stick with the energy supply already in place, this is your opportunity to choose the most economical and reliable source for the area you live.

Different regions have different realities that must be considered when making this choice. The Midwest has massive local natural gas reserves making it equal to or cheaper than electricity as a heat source while the Northeast tends toward using oil to heat their homes.

We have listed the pros and cons of each system type as well as their inherent properties. You will need to weigh the various factors and decide which system will work best for your budget, region and location.

Oil Furnaces

Oil furnaces create more heat than the other types of furnaces though are the least efficient of all three systems.

New Englanders swear by their oil furnaces due to their ability to quickly heat their homes during brutal winter weather.

The cost of a new oil furnace runs around $1900 on average but you can spend up to $6000 or more on high efficiency systems designed to run on reclaimed oil.


  • More heat in a short time
  • No need for local infrastructure
  • Longer lifespan
  • Power outages won’t stop your system


  • Oil prices can fluctuate wildly
  • Large tank needed to hold oil
  • Dependent on oil delivery service
  • Requires annual soot removal from system and chimney

Gas Furnaces

Gas furnaces are most commonly run on natural gas but can be adapted for use with propane or purchased specifically for propane use.

Gas furnaces have decent efficiency resting but there will always be some heat lost to the venting process. Natural gas is an inexpensive fuel when available but not all areas have natural gas service.

Propane systems are ideal for isolated locations where homeowners use large outdoor tanks to store their fuel.


  • Convenience
  • Inexpensive to run
  • Quieter than oil systems
  • More efficient than oil systems


  • Installing gas lines can be expensive
  • Takes longer to heat your home
  • Burners need annual maintenance
  • Danger of carbon monoxide leaks

Electric Furnaces

Electrically heated furnaces are nearly 100% efficient in transferring energy to heat and will keep functioning for up to 30 years. They run silently and require little to no maintenance.

They are, however, completely reliant upon local infrastructure to function and a power outage will, quite literally, leave you out in the cold. Installation also involves high voltage wiring that can be tricky for some homeowners and these systems are slow to react to changes in indoor temperatures.


  • Near perfect efficiency ratings
  • Longer lifespan
  • Low maintenance
  • Environmentally friendly


  • Expensive to run
  • Useless if your power goes out
  • Slow to heat up
  • Additional inspections/permits needed at install

Below is a table covering the essential elements of each fuel type to help you choose the system that is best for your location and budget.

Fuel Type Price Range[1]Install DifficultyCost to RunUpkeep LevelAFUE Rating[2]Noise LevelsExpected Lifespan
Oil*$1800 to $6000HighHighHigh50-90%High20yrs
Gas*  $800 to $5000HighLowModerate59-98%Moderate20yrs
Electric$500 to $3000LowModerate Low95-100%None30yrs

*Oil and propane systems are best for isolated properties

Total Costs of Each Furnace Type

Purchasing your new furnace is only the beginning of your installation expenses. If you are doing it yourself, you will still need to pull permits and pay for inspections.

These can run anywhere from $400 – $1500 depending on your locality. If you are using a professional installer there will be additional costs for removal of the old unit, which can be as low as $50 or run as high as $500 depending on your circumstances, and processing paperwork (permits and inspections).

All of these need to be considered when forming your budget for the project.

Professional Installation

Using a professional to install your new furnace should always be your first choice and included in your budget.

There are too many aspects of furnace installation that can go wrong without specialized knowledge and years of experience causing you the added expense of redoing work and getting it reinspected.

There is also the danger factor of improper wiring causing an electrical fire or poorly installed gas lines or venting allowing gas or exhaust fumes to leak into your home.


Expect to pay between $50 – $250 per hour. $50 – $100 of that is the primary installer’s rate then each additional laborer is another $50.

The amount of time the process will take depends on many variables such as:

  • Old furnace location
  • New furnace location
  • Quality of old infrastructure (gas lines, oil tanks and lines, electrical wiring, breaker panel) and whether they need to be moved/altered for reach or updated to meet code
  • Ease of ingress/egress for new/old units (stairways/doors)


Often you can get away with using your old ductwork but just as often it will need some repairs for air leaks, weak supports or poor installation. These repairs can run from $1000 – $5000.

For a completely new installation ductwork will run from $3000 – $5000 and up.

Factors in ductwork costs include:

  • Accessibility
  • How many stories in your house
  • Zoning systems
  • Number of vents (intake and output)
  • Siding and wall materials

Additional Costs

Depending on the fuel type you have chosen, code requirements and potential damages from removal, there are some additional costs you will need to consider:

  • Framing – $1000 – $2800
  • Electrical – $500 – $1000
  • Gas Lines – $300 – $800
  • Drywall/repairs – $250 – $800

Rough Estimate Equation

When shopping for your new furnace you can apply the following equation to the price to get a rough estimation of your total expense for purchase, installation and removal:

  • Unit – 50% – 70% of total cost
  • Labor – 20% – 30% of total cost
  • Materials, paperwork, removal – 15% – 25% of cost

So, at best, total cost is the price of your unit plus 30% and at worst it is double the unit price for a trouble-free installation. Understand that switching to a different fuel system will add a great deal to your installation costs.

Running Costs

In a typical year, most furnaces will run from October to March. How often they run will depend on where you live and whether the winter season is harsh or mild.

Your energy costs for the year can vary based on many factors including:

  • Size of your house
  • AFUE rating of your furnace
  • Weather conditions in your region
  •  Fluctuating fuel costs
  • Level of home insulation
  • Age of your home
  • Thermal rating of your windows

In order to give you the best sense of potential heating costs, we have selected a report from Massachusetts outlining estimated winter heating costs for a 2100sq ft home for the 2020/2021 winter season.

Few states suffer through colder winters so your home heating costs shouldn’t exceed these numbers:

  • Natural Gas – $1,088
  • Oil – $1319
  • Electric – $4,491
  • Propane – $2.525

To help you reconcile these numbers to your own region, the following chart is based on average fuel costs (pumped gas and electric) in each of the 4 regions of the United States over 12/2020.

Energy Source**NortheastMidwestSouthWest
Pumped Gas p/tu*1.1870.8891.3081.319
Electricity p/kwh*0.1660.1280.1220.160

*based on 12/2020 average  **pumped gas not available in the Atlanta, Denver or Tampa areas

Shopping for Your Furnace

Features You Should Consider

Once you have decided what fuel type you intend to use, it is time to pick out your new furnace.

There are two ratings of particular importance, BTU and AFUE, plus the load calculator and manufacturer warranty to consider.


As stated before, the BTU capacity is all about speed. How quickly do you want your home to heat up and how much is that factor worth to you? BTU capacity has no economical offset. To get more you will spend more with speed of gratification the sole gain.


Unlike BTU capacity, the expense of a higher AFUE rating can be partially or completely offset by energy savings over the life of your furnace. You can use this handy AFUE savings calculator to help you decide which way to go.

Load Calculation

The best way to arrive at the proper load calculator for your home is to have an HVAC company come out and load test your home with specialized equipment.

Barring that, you can use this handy calculator to get an idea of the load of your home. You may also want to check out this brochure from the Energy Department on calculating your home’s load. As stated earlier, getting this number right is essential.


Sadly, or expectedly, this is the most complicated portion of the entire furnace replacement process and could be its own article.

Here are the basics.

Manufacturer Warranties

  • Cover only parts and manufacturing defects
  • Never cover labor
  • Split their parts coverage by type from 10yrs to lifetime
  • Are not always transferable when you sell your home
  • Are immediately void if you:
    • Self install
    • Have the units damaged for any reason
    • Buy from a unauthorized seller
    • Use an unqualified installer
    • Switch from natural to propane gas without proper fixtures
    • Install unauthorized add-ons
    • Don’t read your warranty as there are more ways to void it than those above

Extended Warranties

Just don’t. They are expensive and only continue the nearly non-existent coverage of the original manufacturers warranty.

Some few big box stores offer extended service agreements that are quite good but make sure to read the fine print. If it doesn’t cover parts and labor without a mountain of exclusions, don’t purchase the plan.

Installation Warranties

These are essential to protect you from errors during the installation process. If the installer doesn’t offer at least a 12-month warranty on their work, keep looking for the right installer.

A final word on warranties. Manufacturers dislike honoring them and will weasel out of covering your furnace if they can.

Make sure to register your furnace warranty with the manufacturer or else they may not honor it. If this is a new installation, make sure to include that and your date of occupation in your new home.

Good Luck!

This should be all the information you need to pick the correct furnace to suit your location, home, energy service and budget. We wish you good luck with your new furnace installation.

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