Choosing between a heat pump and a furnace impacts your comfort and energy costs. According to the U. S. Department of Energy (DOE), heating accounts for about 45% of the average home’s total energy cost, so it’s important to choose your system wisely. Our guide highlights the key differences between heat pumps and furnaces so you can make an informed decision about which is best for your home.
What Is a Heat Pump?
A heat pump is a versatile heating and cooling system that transfers heat from one place to another using electricity. Unlike traditional heating systems that generate heat, heat pumps move existing heat to warm your home in winter and remove heat to cool it in summer.
How Does a Heat Pump Work?
Heat pumps operate by circulating refrigerant through a system of coils and compressors. In heating mode, they extract heat from the outside air (even in cold temperatures) and transfer it indoors. This process is reversed for cooling, removing heat from inside your home and expelling it outdoors.
Pro Tip: Skeptics often wonder how a heat pump can extract warmth from frigid air. As Richard Trethewey points out, “People don’t realize that even when it’s really, really cold outside, there’s still heat to be had outside — there’s heat, actually, in a block of ice.” The big breakthrough for modern cold-climate performance, he notes, is inverter technology, which allows the compressor to vary its speed and capture that residual heat far more efficiently than older fixed-speed systems could.
Types of Heat Pumps
There are several types of heat pumps available:
- Air-source heat pumps: The most common type, air-source pumps transfer heat between your home and the outside air.
- Ground-source or geothermal heat pumps: These utilize the earth’s constant temperature to heat and cool your home.
- Water-source heat pumps: These less-common systems use a nearby water source for heat exchange.
Pro Tip: Ross Trethewey, TOH home technology expert, points out that air-to-water heat pump systems offer a key advantage: “Water is a better medium for moving heat,” he says. This makes them a bit more efficient than air-to-air systems and means you can retrofit a heat pump into a house with a hydronic heating system. In fact, a single air-to-water system can provide heating, cooling, and domestic hot water — “You’re getting three for one,” says Ross.
What Is a Furnace?
A furnace is a traditional heating system that generates heat by burning fuel or using electricity. It’s popular in many homes, especially in colder climates where homeowners rely on consistent heat production.
How Do Furnaces Work?
Furnaces heat air and distribute it throughout your home via a ductwork system. The process begins when the thermostat signals the need for heat. The furnace then ignites its fuel source or activates electric heating elements to warm the air. A blower fan then forces this heated air through the ducts and into your living spaces.
Types of Furnaces
Furnaces come in several varieties based on their fuel source, such as the following:
- Electric furnaces
- Natural gas furnaces
- Oil furnaces
- Propane furnaces
What Are the Key Differences Between Heat Pumps and Furnaces?
The difference between heat pumps and furnaces comes down to their energy sources, heating methods, and overall efficiency.
Energy Source
Heat pumps primarily use electricity to move heat, while furnaces can use various fuel sources. Most heat pumps rely solely on electricity to power their compressors and fans. In contrast, furnaces typically burn natural gas, propane, or oil, though electric furnaces are also available.
Heating Method
The heating method is perhaps the most significant difference between these two systems. Heat pumps transfer heat from one place to another, essentially moving existing heat rather than generating it. This process allows them to provide both heating and cooling. On the other hand, furniture generates heat by burning fuel or using electric resistance. They produce heat directly, which is then distributed throughout your home.
Efficiency
Heat pumps are generally more efficient in mild climates, as they can provide up to three times more heat energy than the electrical energy they consume. However, their efficiency can decrease in extremely cold temperatures. Furnaces, while typically less efficient overall, maintain their efficiency regardless of outdoor temperatures, making them a reliable choice in colder climates.
Pro Tip: Ross, Ask This Old House plumbing and HVAC expert, explains that heat pumps generate “low-temperature heat” compared to furnaces: “If I’m sending hot air through this with a heat pump, it might be 100 degree supply air leaving the heat pump.” That’s notably cooler than furnace output, which is why heat pumps need to run longer cycles to maintain comfort — something homeowners should factor into their efficiency calculations.
Climate Considerations for Heat Pumps vs. Furnaces
Your climate plays a big role in determining whether a heat pump or furnace is the better choice for your home. Each system has its strengths and weaknesses depending on your area’s typical weather conditions.
Heat Pumps in Mild Climates
Heat pumps are most cost-effective in mild climates where winter temperatures stay above freezing. In these conditions, an air-source heat pump can efficiently extract heat from the outside air to warm your home. Additionally, heat pumps offer the advantage of providing both heating and cooling, making them an excellent year-round solution in areas with moderate summers and winters.
Furnaces in Cold Climates
For homeowners who live in cold climates with long, harsh winters, furnaces are often the more reliable and cost-effective choice. Furnaces maintain their heating efficiency regardless of outdoor temperatures, ensuring consistent warmth even in sub-zero conditions. This reliability is crucial in regions where temperatures frequently drop below freezing, as standard air-source heat pumps can struggle to extract sufficient heat from very cold air.
Compare the Costs of Heat Pumps vs. Furnaces
When comparing heat pumps and furnaces, consider both the initial installation costs and long-term operating expenses. These factors vary based on your location, energy prices, and specific system choices.
Initial Installation Costs
Heat pump installation averages $4,236–$7,904, whereas furnace installation averages $4,780.* These prices can vary based on your home’s size, the unit’s efficiency, and any necessary ductwork modifications.
*Cost figures via 2024 data from Angi.com.
Operating Costs
Operating costs depend largely on local energy prices and climate. In areas with mild winters and affordable electricity, heat pumps often have lower operating costs due to their high efficiency. In regions with cold winters or low fuel prices, furnaces may be more economical to run.
Consider both short- and long-term costs when making your decision. While heat pumps might have higher upfront costs, their energy efficiency could lead to significant savings over time in the right climate.
What the Pros Say: When asked whether a heat pump always saves money over a furnace, TOH’s Ross lays out a clear cost hierarchy: “Historically, electric baseboard has been the most expensive system to heat a building, and followed up by your propane and oil furnaces… And then gas and heat pumps are kind of there in kind of the next category.” The takeaway? If you’re replacing electric baseboard or an oil or propane furnace, a heat pump is very likely to cut your operating costs. But if you already heat with natural gas, the savings may be marginal — or nonexistent.
Pro Tip: Ross, TOH’s HVAC expert, explains that comparing fuel costs isn’t straightforward: “Electricity is billed to you in price per kilowatt hour… propane and oil are billed to you in price per gallon… and natural gas is billed to you on a price per therm.” To make a fair comparison, he recommends using a “levelized price per kilowatt hour” chart that accounts for your local electric rate and the average seasonal efficiency of the heat pump.
Consider the Energy Efficiency and Environmental Impact of Heat Pumps vs. Furnaces
As energy efficiency and environmental concerns become increasingly important, you should consider this carefully. Both systems have made significant strides in efficiency, but they differ in their overall environmental impact.
Heat Pump Efficiency Ratings
Heat pumps are rated using two primary metrics:
- SEER (Seasonal Energy Efficiency Ratio) for cooling efficiency
- HSPF (Heating Seasonal Performance Factor) for heating efficiency
Modern heat pumps can achieve SEER ratings of up to 30 and HSPF ratings of up to 13, indicating high efficiency. These systems are particularly environmentally friendly in areas where electricity is generated from renewable sources.
Furnace Efficiency Ratings
Furnaces are rated using AFUE (Annual Fuel Utilization Efficiency), which measures the percentage of fuel converted to heat. High-efficiency furnaces can achieve AFUE ratings of up to 98.5%, meaning they convert nearly all of their fuel into usable heat. However, the environmental impact of furnaces depends largely on their fuel source, with natural gas generally being cleaner than oil or propane.
On a recent TOH project, HVAC expert Roger Cook explained how a high-efficiency modulating gas furnace works in practice: “So much of the heating season is those mild spring and fall days where you have low fan and low gas input, and that’s really efficient.” Rather than simply cycling on and off, modulating furnaces work like a dimmer switch—automatically adjusting gas input and fan speed to match the heat leaving the home. That particular unit was 96% efficient, meaning, as Roger put it, “96 cents out of every dollar becomes heat inside the building.” One important note: furnaces this efficient produce such cool exhaust that they can’t vent into a traditional chimney—instead, they use PVC pipes routed to the outside of the building.
What Maintenance Is Required for Heat Pumps vs. Furnaces?
You’ll need to maintain both heat pumps and furnaces for optimal performance, efficiency, and longevity. While both systems require attention, their maintenance needs differ.
Heat Pump Maintenance
Heat pump maintenance typically involves these steps:
- Checking and cleaning outdoor coils annually
- Cleaning indoor coil and condensate drain annually
- Cleaning or replacing air filters every one to three months
- Inspecting refrigerant levels and checking for leaks
Regular maintenance can help maintain your heat pump’s efficiency and prevent costly repairs. Many homeowners choose to install a ductless mini-split air conditioner as part of their heat pump system, which may require additional maintenance considerations.
Expert Insight: TOH plumbing and HVAC expert Richard Trethewey puts maintenance in perspective: “People wouldn’t dream of driving their car thirty thousand miles without an oil change, a tune-up and a new air filter. Yet that’s exactly how they treat their heating and cooling systems.” Heat pumps need a yearly tune-up to avoid burning more energy and risking breakdowns. Key checkpoints include the compressor, fan, indoor and outdoor coils, and refrigerant lines.
Furnace Maintenance
Furnace maintenance usually includes the following steps:
- Annually inspecting of burners, heat exchanger, and flue system
- Cleaning blower components
- Lubricating moving parts
- Replacing air filters every one to three months
Regular furnace maintenance is essential for safety, especially for gas furnaces, where carbon monoxide leaks can be a serious concern.
What Are the Pros and Cons of Heat Pumps?
Understanding heat pumps’ advantages and disadvantages can help you determine if this system is right for your home.
Advantages of Heat Pumps
- Are more environmentally friendly, especially when powered by renewable electricity
- Come with lower operating costs in suitable climates
- Have high energy efficiency in moderate climates
- Provide both heating and cooling
Disadvantages of Heat Pumps
- Are less effective in extremely cold climates
- Have a shorter lifespan compared to furnaces (typically 10–15 years)
- Have higher upfront costs compared to furnaces
- May require backup heating in very cold regions
What Are the Pros and Cons of Furnaces?
Furnaces also have pros and cons to consider.
Advantages of Furnaces
- Can use various fuel types
- Have lower initial installation costs
- Have a longer lifespan (typically 15–20 years)
- Offer effective heating in all climates, such as extreme cold
Disadvantages of Furnaces
- Are less energy-efficient compared to heat pumps in moderate climates
- Come with potential safety concerns if using gas
- Have higher operating costs in some regions
- Only provide heating, not cooling
Dual Systems: Combining Heat Pumps and Furnaces
Sometimes, homeowners opt for a dual system that combines a heat pump and furnace. This setup, often called a hybrid heating system, leverages both technologies’ strengths. The heat pump provides efficient heating and cooling in mild weather, while the furnace takes over during extremely cold temperatures. This combination can offer optimal comfort and efficiency year-round, especially in regions with varying seasonal temperatures.
Factors To Consider When Choosing Between a Heat Pump and Furnace
When deciding between a heat pump and a furnace, consider the following factors:
- Energy costs in your area (electricity versus gas/oil prices)
- Local building codes and regulations
- Local climate and temperature extremes
- Your budget for initial installation and long-term operating costs
- Your home’s existing ductwork and insulation
Recent Technological Advancements
Both heat pump and furnace technologies have significantly improved in recent years, enhancing their efficiency and performance.
Innovations in Heat Pump Technology
Here are some recent advancements in heat pump technology:
- Improved cold weather performance, with some models operating efficiently at temperatures as low as -13 degrees Fahrenheit
- Integration with home automation systems
- Smart controls for optimized operation
- Variable-speed compressors for better energy efficiency
Improvements in Furnace Design
Furnace technology has also progressed, with innovations such as the following:
- Advanced safety features and smart diagnostics
- Condensing technology in high-efficiency models
- Modulating gas valves for more precise temperature control
- Variable-speed blowers for improved efficiency and comfort
Our Conclusion
Choosing between a heat pump and a furnace depends on your local climate, energy costs, and specific home heating needs. Heat pumps offer excellent efficiency and the dual benefit of heating and cooling, making them ideal for mild to moderate climates. Furnaces provide reliable heating in colder regions and may have lower upfront costs.
Consider consulting a heating and cooling professional to assess your home’s needs and determine the most cost-effective and efficient solution. Whichever system you choose, proper installation and regular maintenance are key to ensuring optimal performance and longevity.
