Updated January 2025
When it comes to the cost of a new furnace, many factors come into play. In this post, we’ll cover the basics, laying the foundation for deeper dives into specific details in future posts.
The price you pay for your furnace—and its long-term operating costs—depends on key characteristics like efficiency, size, and type. A professional heating specialist can evaluate your home’s unique features, including its size, layout, and age, to recommend the most effective and budget-friendly system.
Equally important is the quality of the installation. Even the most efficient furnace can underperform if installed incorrectly. Choosing a skilled, experienced, and highly-rated heating specialist ensures your investment delivers maximum comfort, efficiency, and reliability for years to come.
HEATING WITH GAS
Gas furnaces dominate colder climates for a reason—they’re reliable, powerful, and increasingly efficient. Today’s high-efficiency furnaces consume at least 30% less fuel than their older counterparts, helping homeowners save on energy costs. In addition to their efficiency, modern furnaces operate much more quietly and maintain a more consistent temperature, providing even, comfortable heating throughout your home.
KEY ATTRIBUTES OF A NEW GAS FURNACE THAT AFFECT PRICE:
Heat Output
Heat output is measured in British Thermal Units (BTUs). While a higher BTU rating might sound better, bigger isn’t always better. The right BTU level depends on your home’s size, insulation, and climate. A heating specialist can help determine the appropriate BTU and tonnage to ensure your furnace heats your home effectively without wasting energy.
Furnace Efficiency
Efficiency is one of the most significant factors in both upfront and long-term furnace costs. Older furnaces often had efficiency ratings of 80% or less, meaning 20% of the heat produced was lost as waste. Modern furnaces, however, boast efficiency ratings of 95% or higher, with some models reaching an impressive 98%. Even a small increase in efficiency can significantly reduce your utility bills, making this a key consideration when choosing a new system.
Staging
Staging impacts both efficiency and comfort. Older furnaces typically ran on a single stage, meaning they operated at full power or not at all. Modern high-efficiency furnaces offer advanced staging options:
Single-stage: Operates at one setting—full blast.
Two-stage: Starts at full power to quickly meet the desired temperature, then operates at a lower setting to maintain it efficiently.
Modulating: Adjusts power output precisely to match the home’s heating needs in real-time, providing the most efficient and quiet operation.
For example, a two-stage furnace paired with a smart thermostat can optimize comfort and efficiency. It may begin with full power to reach your desired temperature quickly, then switch to a lower setting to maintain consistent warmth while using less energy.
Staging also allows for personalization. Some homeowners prioritize the quiet operation of a variable speed or modulating furnace, others seek the highest efficiency possible. Whatever your preference, staging options provide flexibility to meet your comfort needs.
ELECTRIC FURNACE
An electric furnace, also known as an air handler, is a system that often uses electric heat strips to warm the air in your home. Electric furnaces are commonly paired with a heat pump. The heat pump handles heating during milder temperatures and cooling during the warmer months, while the electric furnace with its backup heat strips provides support when the temperature drops too low for the heat pump to operate effectively, supplementally, or when the heat pump requires a repair and is not working.
The indoor unit is sized in the same way as a gas furnace. The indoor air handler holds electric heat strips that act as an emergency backup form of heat if the outdoor heat pump fails to work or the temperature outside gets so low that the outdoor unit cannot work efficiently. The outdoor unit not only heats the house but acts as an air conditioner as well — cooling your house in the summer heat. Heat pumps can be paired with any type of furnace, not limited to electric and gas. A heating specialist can discuss your options and associated costs.
Breaking Down the Complete Furnace Installation Cost
Labor
In addition to the price of the furnace itself, you'll need to account for the labor costs involved in installing your new system. At Orbit, we provide an up-front flat bid that includes both equipment and labor, eliminating surprises.
Removal And Disposal Of Old Furnace
If you’re replacing an older unit, there’s typically an additional cost for the removal and disposal of the old furnace. Many contractors include this in their quote, but some may charge an extra fee. Be sure to ask your contractor if removal is included in the price.
Permits
Depending on the scope of your furnace installation, permits and inspections may be required. The HVAC contractor will need to pull the appropriate permits and schedule any necessary inspections.
Other Costs
If you’re replacing your furnace with a similar model, there may be no additional costs. However, if you’re upgrading to a high-efficiency furnace or switching to a gas system from another type, there could be extra expenses involved, including:
Gas Line Installation: If you’re installing a gas furnace and don’t already have an incoming gas line, the cost to hook up your home to gas will be an additional expense.
Ductwork and Venting Modifications: Depending on the condition of your existing ducts or venting system, repairs or upgrades may be necessary.
Thermostat Replacement: Some furnaces require specialized thermostats. If your current thermostat isn’t compatible with the new system, you may need to purchase a replacement. Additionally, if your thermostat wiring doesn't have the necessary connections for the new furnace, it may need to be updated as well.
Electrical Updates: Some installations may require new electrical breakers or disconnects, which may also involve hiring an electrician and securing a permit, adding further costs.
Angi reports that HVAC replacement costs average around $7,500 nationwide, with a typical range from $5,000 to $12,500.
At Orbit we provide an up-front flat bid for the total cost of installation. Our no surprise pricing includes all labor costs, removal and disposal of the old furnace, and all necessary permits.
Efficiency Ratings and Energy Savings
When considering a new furnace, one of the most important factors to evaluate is its Annual Fuel Utilization Efficiency (AFUE) rating. This percentage measures how efficiently a furnace converts fuel into usable heat.
For example, a furnace with a 95% AFUE rating converts 95% of the fuel it uses into heat, while only 5% is lost. High-efficiency furnaces typically have AFUE ratings between 90% and 98.5%, which translates into lower energy bills over time. Although these models may cost more upfront, the long-term savings and reduced environmental impact make them a worthwhile investment.
Why It Matters in Portland:
Portland's chilly winters often demand consistent heating, making energy efficiency a priority. By upgrading to a high-efficiency furnace, homeowners can see significant savings on their utility bills while reducing their carbon footprint.
Incentives and Rebates
Replacing your furnace doesn’t have to be a financial strain—especially if you take advantage of the rebates and incentives available to Portland-area homeowners. For instance, Energy Trust of Oregon offers incentives for high-efficiency gas furnaces for income-qualified homeowners through their Savings Within Reach program. Depending on the model and efficiency rating, you could qualify for rebates of up to $1600.
In addition, homeowners may be eligible for federal tax credit up to $600 when installing qualifying 97% energy-efficient furnace installations. These incentives make upgrading to a modern, energy-efficient furnace more affordable than you might think.
Maintenance and Lifespan Considerations
Your furnace is one of the hardest-working appliances in your home, especially during the cold months. To keep it running efficiently and extend its lifespan, regular maintenance is essential.
Maintenance Tips:
Schedule Annual Tune-Ups: A professional inspection can identify and address minor issues before they turn into costly repairs.
Replace Air Filters: Dirty filters restrict airflow, forcing your furnace to work harder and use more energy. Change MERV8 filters every 1–3 months during peak use, higher MERV filters can be changed 1-2 times per year.
Seal Ductwork: Leaky ducts can reduce your system’s efficiency by up to 20%. Sealing them ensures the warm air reaches its intended destination.
Most furnaces last between 15 and 20 years, but investment in a top brand along with regular maintenance can help your furnace last 20 years or longer. Investing in better rated equipment and a maintenance plan is a small cost compared to the potential savings from improved efficiency and a longer furnace lifespan.
Further Reading
Consumer Reports Gas Furnace Buying Guide
Consumer Reports offers an in-depth guide on selecting gas furnaces, covering types, features, and essential considerations to help you make an informed choice.