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How Much Does a New Furnace Cost?

The bulk of the cost of a new furnace comes from installation. The equipment itself generally costs between $1,200 and $1,500, while labor averages around $3,500. These costs can vary, however, depending on your location and the equipment you choose.

What a Furnace Does

Furnaces heat homes by warming air and distributing it within the house. Older furnaces used coal or wood for fuel, but modern ones use other resources.

Mankind spent centuries trying to solve the problem of central heating. The ancient Romans used a system called a hypocaust, where a fire in the basement sent exhaust through the walls and vented it out of chimneys. Although hypocausts were only used in stone and brick dwellings, they were still a fire hazard.

Hypocausts disappeared after Rome fell, but the invention of the chimney paved the way for the next revolution in heating. People began using stoves to heat their homes, and eventually - thanks to inventors like Benjamin Franklin and his Franklin stove - the stoves gradually produced less smoke and more heat. Eventually, the stoves were fashioned in such a way as to better distribute heat throughout a home. Once fans became more widely available in the late 19th and early 20th centuries, people could use furnaces to force air through ducts.

A new furnace costs a few thousand dollars, but the expense is worth it in harsh climates.A new furnace costs a few thousand dollars, but the expense is worth it in harsh climates.

Types of Fuel
There are three main fuel sources. Most people choose a new furnace that runs on the same fuel as their old one, primarily because it's what their house was built for. If you'd like to switch to a different type, consult an HVAC contractor to make sure your home is ready.

  • Natural gas/propane: Natural gas is used in more than half of American homes. In these systems, a pilot light ignites the burners in a combustion chamber. The resulting heat travels to the heat exchanger where it's raised to whatever temperature the thermostat indicates. Then, blowers send the heated air through the ducts. Propane furnaces operate similar to natural gas ones.
  • Electricity: Some furnaces use an electrical ignition to start the heat generation process instead of a pilot light. Inside an electric furnace are various heating elements, each containing conductive coils that heat the air as the electrical current passes through them. If the thermostat is set to a high temperature, more elements activate.
    Electric furnaces are the only type with the potential for 100 percent efficiency, meaning all of the fuel used can convert to heat. However, they're still the most expensive solution overall because a lot of this heat is lost through the ducts.
  • Oil: Annual heating costs from oil furnaces are more than twice that of natural gas. They're older than gas and electric furnaces, and their age plus the rising cost of oil makes them pretty much obsolete.

Efficiency
The Federal Trade Commission requires manufacturers to display a furnace's annual fuel utilization efficiency (AFUE) so consumers can compare different models and select the one that best matches their budget and projected heating costs.

The AFUE measures how efficiently a furnace makes use of its fuel.

The AFUE measures how efficiently a furnace makes use of its fuel, whether it's electricity, gas or oil. It's described in terms of percentages, so an AFUE of 85 percent means 85 percent of the energy from the furnace's fuel heats the house. Older heating systems tend to have the lowest AFUE, averaging between 55 and 70 percent, according to the U.S. Department of Energy. Mid-range systems have an AFUE between 80 and 83 percent, while high-efficiency ones run between 90 and 99 percent.

Maintenance
Sticking to an annual maintenance schedule can be a hassle, but you'll likely be grateful for doing so come winter. Most people give their systems a tune-up in the fall before the weather gets cold.

  • Start by turning the system off and cutting the electricity and fuel supply. Wear a filter or gas mask to avoid inhaling any particles or fumes.
  • Clean and inspect the combustion chamber in gas systems. This is where the mixture of fuel and air is ignited, creating heat. The process also creates soot, which can corrode the chamber. Scrape out any buildup with a wire brush, then vacuum the area. Take a quick look around for corrosion or holes.
  • Gently clean the blower fan and, if applicable, check the condition of the fan belt. In terms of tension, it shouldn't move more than a half inch when pressed. If you see any cracks on the underside of the belt, replace it.
  • Gently remove dust from the pilot. You can accomplish this by pointing a straw at the area and blowing air through it.
  • Look at the exhaust flue pipe for holes. These could potentially leak carbon monoxide.
  • If your system runs on oil, replace the oil filter. Otherwise, change the air filter.
  • After everything is cleaned and reassembled in a gas system - but before replacing the combustion chamber door - bring back the power. Test the furnace by increasing the heat via the thermostat and observing the burner flames, taking care not to breathe directly on them, as doing so changes their color. The flames should be an even blue - yellow means the burners are dirty.


Additional Factors to Consider

A professional heating and cooling company can perform maintenance for you, and a more experienced eye may notice something you could overlook. Tune-ups average about $100, depending on your location.

Saving Money on Heating Costs
Heating is commonly a person's most expensive utility bill, but there are numerous ways to help you save money:

You can save about 10 percent on heating costs each year by lowering your thermostat for eight hours.

  • With a new furnace: Older furnaces leak heat and don't operate as efficiently as new ones. A brand new furnace produces more usable hot air, needs fewer repairs and will last at least a decade longer. A new furnace doesn't always guarantee a smaller heating bill, however. Your HVAC contractor needs to be sure your ductwork is clean and that the sheet metal is properly fitted, otherwise it can take just as much energy to heat your home as before.
  • By retrofitting an old furnace: It is possible to upgrade an older furnace so that it's more efficient, thereby saving energy costs. However, the price of an upgrade should be weighed against the cost of a new system, especially if your furnace will need replacing in a few years.
  • With a thermostat: If your main goal for installing a new furnace is to save on future bills, try simply adjusting your thermostat. Per the U.S. Department of Energy, you can save about 10 percent on heating costs each year by setting your thermostat back between 7 and 10 degrees Fahrenheit for eight hours each day. For most people, this means lowering the temperature either while asleep or at work. If you don't want to come home to an icebox and wait uncomfortably for the temperature to rise, you can install a programmable thermostat. Also know as setback or clock thermostats, these allow you to preset your thermostat so it will automatically adjust to different temperatures at specific times. A new programmable thermostat usually costs between $50 and $100, although prices increase if you choose a touchscreen or smart option. Smart thermostats, though more expensive, have their benefits. They're connected to the internet and can be adjusted via smartphone or tablet, allowing you even more flexibility to alter your home's heating when you're away.
  • With drapes: Blackout curtains eliminate light and reduce the transfer of heat, helping keep your home cool in the summer and warm in the winter. During the winter months, open the drapes or blinds on your south-facing windows to allow sunlight to warm your rooms naturally. Close them at night to prevent heat from escaping.
  • With space heaters: While not efficient for heating an entire house, small space heaters are often less expensive than other options when you only want to heat one room or when central heating is just too costly. They're also perfect for helping individuals who are sensitive to cold temperatures, such as the sick or elderly. However, improper use and negligence commonly leads to house fires, so only purchase a space heater if you're certain it won't be misused.
  • By going green: To offset some of the cost of purchasing a new system and to inspire property owners to take an environmentally friendly approach, many states offer rebates or tax credits for people who purchase solar heating or other clean energy systems.

"Research your state's license and insurance requirements so you know what to look for in an HVAC contractor."

Selecting an HVAC Contractor

  • Before looking for someone to install your new furnace, research your state's license and insurance requirements so you know what to look for. Ask friends or co-workers for referrals or contact a local trade organization.
  • Select a few options, then have them inspect your home. Be sure to inform them of any unique needs, such as one room that's harder to heat than others, as well as the model of both your old and new systems.
  • During the home inspection, ask potential contractors about other things that might be affecting your heating, including the window, insulation and duct system.
  • Get estimates for pricing. Make sure warranties are included in these estimates.
  • Once you've selected a contractor, establish a job schedule. Both of you should sign a written proposal guaranteeing this exchange.

Warranties

  • Manufacturer warranty: This covers the equipment and any associated parts.
  • Furnace contractor's warranty: This covers the installation and any other necessary labor, such as electrical wiring or sheet work. Be sure to use a company that provides a warranty of at least five years - some only guarantee the installation until they leave your property. Also be sure to clarify with your contractor what will happen should they go out of business before your warranty expires.

Other Heating Options

Heat pumps are perfect for areas with moderate temperatures.

  • Boilers: These are another common method of heating a home. Boilers heat water, which is then spread through baseboard radiators or radiant floor systems. Alternately, the hot water flows through a coil to heat the air. Some boilers use the heated water to create steam, which is sent through pipes to radiators.
  • Heat pumps: Heat pumps are perfect for areas with moderate temperatures. Instead of producing heat themselves, they move hot air from one area to another. In the winter, they pull any available heat from the outside and transfer it to your home, making it warmer. They do the opposite in the summer, making a cool house cooler. Air-to-air heat pumps are the most common, transferring heat from inside air to out and vice versa. Geothermal pumps, on the other hand, transfer heat to and from the ground or nearby source of water. Geothermal pumps cost more to install but are inexpensive when used. However, whether or not a geothermal pump will work for your home depends on the surrounding environment.
  • Solar heating: These systems use panels that sit on the roof of a building to collect sunlight. Solar panels work best when installed so that they're facing south, but a good contractor can find a solution that works for your home regardless of how it's built. The energy from solar panels heats air or water, and the heat is either sent directly into the home or stored for later. Solar systems reduce pollution and cut energy costs in areas with harsh winters and good sunlight. Before installing one, however, be sure to investigate local building and zoning regulations. In the past, homeowners have run into issues like heavy roof loads, bad wiring, side yard blockage and potable water source tampering. Knowing what is and isn't lawful in your area prevents headaches - and the heavy expenses incurred by suddenly changing plans - down the road. Also, have a look at what is and isn't covered under your homeowner's insurance policy just in case anything happens to the system.
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