Furnace Prices Review: Types, Taxes and Cost
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When it comes time to replace a furnace, many homeowners will fall into the trap of ultimately paying a heavy price for a low-cost furnace. The initial, up-front purchase price of any furnace is really only a small part of the equation.
Choosing a new furnace among numerous options can be a challenging decision, but a smart investment in heating can save you from burning through your wallet — or worse — in the future. If you pick the right one, it may actually pay you back over its life.
Savvy buyers consider other factors that can determine long-term savings, including:
- Type of furnace.
- Size of furnace.
- Energy efficiency.
A willingness to pay for a higher "priced" furnace can translate into saving more money down the road.
Furnaces prices can differ between two similar furnaces for numerous and complex reasons. So before you dive into a pile of dense textbooks or sales brochures to decipher the differences, know that these other factors can be a simpler and better guide when pinpointing the best replacement furnace for your home.
For prices and performance overviews on specific brands and models, check out our guides on:
If you're looking for a general overview of furnace prices, scroll toward the bottom of the page.
Efficiency is a critical performance measurement of any furnace you're considering for your home. Each furnace you review will be given an efficiency rating known as an Annual Fuel Utilization Efficiency rating or AFUE.
The technical considerations going into measuring AFUE were established and are routinely updated by the American Society of Heating, Refrigeration and Air-Conditioning Engineers (ASHRE). ASHRE is the recognized source for technical specifications used by architect and engineers in designing and measuring HVAC systems for both residential and commercial use.
In general, look for furnaces in your price range with higher AFUE ratings. Put simply, your AFUE rating scores the amount of heat generated for the amount of energy used. For example, if you have a furnace with an AFUE rating of 90, you can expect it to generate 90 units of heat for every 100 unit of energy it consumes.
A higher efficiency rating is more environmentally friendly and, depending on your energy usage, usually saves you more money over the course of a furnace’s life, which is generally about 20 years.
It is federally required that all furnaces manufactured today must have at least an AFUE rating of 78 percent.
Energy Star suggests different ratings to look for based on furnace type and your regional location in the U.S.:
- Gas furnaces: If you live in the North, then an AFUE of 95 percent or higher. If you live in the South, seek gas furnaces with a 90 percent AFUE rating or higher.
- Oil furnaces: A lower AFUE rating of 85 percent or higher works for oil furnaces.
- Gas and oil furnaces: You’ll also want to look at other product features when taking into account energy efficiency. For instance, air leakage and the furnace fan efficiency should be 2 percent or less.
Furnace fuel costs fluctuate depending on location and other factors, but as a general rule of thumb:
- Electricity is more expensive than oil.
- Oil is more expensive than natural gas.
- Natural gas is the least expensive of the three.
If you are replacing an old furnace with one that uses that same type of fuel, a simple math equation can help you determine the best long-term option and could mean the difference between thousands of dollars over the long-haul.
Contractors will use the AFUE and other ASHRE specification and calculations to begin determining an estimate for your furnace replacement cost and recommendations for which furnace options offer the best efficiency levels for your home.
Scroll to the bottom of the page to see the equation.
If you live in the South, a new furnace saves you about $36 a year. Northerners experience a savings of roughly $94 a year, according to Energy Star.
While you may set your home's thermostat at varying, subtle levels of heat monitoring, keep in mind that a furnace essentially operates at two speeds: full power or no power. There is no "medium" or "in-between" setting for when a furnace is actually triggered. Furnaces operate by running at full power whenever the thermostat drops below a set heat level.
An oversized furnace will continually turn on and off in brief, high-energy use intervals, wasting more energy over time than a continuously running furnace. Because of the constant starts and stops, an oversized furnace tends to break down more often. Factor in the possible repair and additional maintenance costs when looking at furnaces that may be too big for your needs.
An undersized furnace will fail to heat your home properly. Not only will you be dissatisfied with the performance of an undersized furnace, you can also expect a higher fuel use and a faster depreciation and wearing out of equipment that is constantly trying to keep up to the heating needs of your home.
There is no single identifying rule about the correct size because so many factors must be considered, including:
- Size (square footage) and shape of your home.
- Window location.
- Air infiltration. (Do your windows leak cold air and are there drafts in your house?)
- Number of occupants.
- Temperature preferences.
Because of these many factors, watchdog groups recommend hiring contractors who use industry standard sizing guides, such as "Manual J Residential Load Calculation."
Watchdog groups also suggest seeking multiple furnaces prices and sizing quotes to ensure you’re buying a new furnace that fits your home.
When shopping for a new furnace and considering the size of a gas furnace or a heat pump, note the British Thermal Units or BTU number for the furnace. BTUs are a measure of heating and cooling energy.
For heating purposes, the higher the BTU, the better since it indicates how much heat the unit produces.
All of the factors listed above, like size of home and number of windows, affect the BTUs once the furnace or heat pump is installed in your home.
In order to estimate how many BTUs you need, first figure out the square footage of your home. The basic formula for calculating the square footage of a square or rectangle is:
- Length x Width = Area
If you have an unusual shaped home or rooms, it’s a completely different formula.
Generally speaking, though, the square footage of your home should be listed in your buyer documents from when you purchased the home. You can also go to such sites as Trulia or Zillow, enter your address, and find your home’s square footage there. This latter method may not reflect the most accurate square footage, yet it will get you in the ballpark so you can figure out what size furnace you need.
Once you have the total square footage of your home, follow this formula to calculate the furnace or heat pump size you need for extremely cold climates:
- Square footage x 35 = minimum number of BTUs needed
If you live in a milder climate, yet still have heating needs, use this formula:
- Square footage x 25 = minimum number of BTUs needed/li>
Here’s rough estimates at a glance of how many BTUs you may need to heat your home:
- For homes with 1,500 square feet, install furnaces or heat pumps with 37,500 to 52,500 BTUs.
- For homes with 2,000 square feet, install furnaces or heat pumps with 50,000 to 60,000 BTUs.
- For homes with 2,500 square feet, install furnaces or heat pumps with 62,500 to 87,500 BTUs.
If you purchase a high-efficiency furnace with a fantastic AFUE rating, then you might be able to get away with less BTUs. Your HVAC contractor can advise you on which new furnace is best for your home and how many BTUs you need.
Industry experts recommend buying furnaces carrying the Energy Star logo, which can significantly reduce your furnace costs.
Furnaces that meet certain environmental specifications are eligible for significant federal tax credits and, in some states, state tax credits, tax deductions, even favorable financing for installing energy efficient furnaces.
Energy Star bases its furnace approval on the AFUE rating. In order to receive the current energy tax credit of $150 (which includes installation costs), your furnace must have an AFUE rating of 95 percent or higher. The heating and cooling tax credit is only available through Dec. 31, 2013.
For Energy Star approved geothermal heat pumps, you can receive a federal tax credit of up to 30 percent. This credit ends on Dec. 31, 2016.
There are also some communities or local, nonprofit organizations that will dispose of your old furnace for free when you elect to purchase or install a new, energy efficient furnace.
These deductions vary and not all Energy Star-certified equipment is eligible for tax credits.
To find out your eligibility, visit Energy Star. To find out about energy efficiency programs in your state, contact your state's Department of Energy or consult your local building inspector's offices.
It's difficult to accurately report specific prices for furnaces as most manufacturers will not reveal those prices unless you are a commercial client. Some furnace makers will offer ranges of costs for contractors, architects or engineers on a company website. Using a variety of resources, we can offer some guidelines for considering which type of furnace might best fit your budget.
The following is a rundown of the most popular options available and the expected price to buy and install a new furnace. The price ranges include the furnace installation cost, which is subject to major fluctuation. Some homes may need new ductwork, which can cost several thousand dollars, while others may already be outfitted for a new furnace.
For more specific prices for your needs and location, follow this link for four free estimates from licensed, verified contractors in your area.
- Gas furnace prices: $2,500 to $14,000.
- Recommended for most homes due to the low cost of natural gas.
- Oil furnace prices: $2,000 to $8,000; potentially more if the furnace installation requires major modifications.
- Recommended only if a gas furnace is not an option due to lower efficiency and required routine maintenance.
- Electric furnace prices: $1,000 to $2,500.
- Recommended only if gas and oil heaters are not an option due to high energy costs, unless used sparsely or to heat a small area.
- Heat pump prices: $1,500 to $7,000 for air source heat pumps and $7,000 to $25,000 for ground-source heat pumps. Price depends on size, efficiency, location and infrastructure work.
- Recommended for temperate or warm climates, because heat pumps can become unworkable when the outside temperature drops to freezing. Unlike other traditional heating options, which rely on fuel combustion, heat pumps create warmth through a refrigerant that pulls in heat from the outside air, which in some cases can significantly lower energy costs.
- Most heat pumps double as air conditioning units, but are less efficient than a traditional central air conditioner.
Remember, you're looking at cost versus price when evaluating which furnace to choose for your home.
A critical piece of determining the cost will be to calculate the long-term savings you can expect to enjoy from different efficiency ratings in furnaces that use the same type of energy for fuel.
Here's a fairly simple calculation you can use:
- Multiply your annual energy bill by your old furnace’s efficiency (AFUE) rating (such as 0.75 for an AFUE rating of 75). Divide by the higher efficiency rating in a new furnace (such as 0.85 for an AFUE 85 rating). This will give you your annual savings from an efficiency standpoint.
- Take the cost difference for a more efficient unit (such as $1,000 more for an 85 AFUE-rated furnace) and divide by your annual savings. This will give you the amount of years it’ll take to recoup the difference.
- When considering the annual savings, note the furnace’s expected lifespan. Generally, furnaces last about 20 years.
Because numerous factors can determine the difference in the cost of a new furnace, experts recommend seeking quotes from multiple HVAC contractors.
The contractor should come to your home and inspect the heating space to determine the proper furnace size. Request an itemized estimate that breaks down the cost of the furnace unit and furnace installation.
Here’s a checklist of what the contractor should provide you and steps to follow:
Before you know it, you'll be nice and cozy, with furnace prices far from your thoughts.
About the Author Rachel Wright
Rachel Wright is an SEO content editor at Reply! with more than 10 years of editing experience. She enjoys interior design and gardening. To share home improvement ideas, find her on Google+.