Furnace VS Heat Pump: Which Is Better? (14 Differences + Cost Calculators)


Furnace or heat pump? Which one is better? Some people might have furnaces and heat pumps confused; thinking they might even be the same thing. That’s wrong; heat pumps and furnaces are vastly different. We will look at all the 14 key differences between furnaces and heat pumps.

You will find a table of these differences with pros and cons for furnaces and heat pumps neatly summarized further on.

heat pump vs furnace
Comparison of a Goodman gas furnace (left) and Mr Cool mini-split heat pump (right).

Here are just a few differences from the get-go:

  • Mechanism And Heat Distribution. Furnaces use gas combustion and provide heat via ductwork. On the other hand, heat pumps absorb the heat from the outside (that’s why they can have 300% energy efficiency but cannot operate effectively in extremely cold weather).
  • Energy Source. Furnaces use primarily gas combustion to produce heat. Heat pumps run only on electricity, never on gas.
  • Heating Capacity. Furnaces can easily generate 100,000+ BTU of heating output (8+ ton units) while heat pumps can only generate up to about 60,000 BTU of heating output (5-ton units).
  • Cooling? Heat pumps can be used as air conditioners (they switch to cooling in the summer). Furnaces cannot be used as air conditioners.
  • Unit And Installation Costs. Heat pumps are generally more expensive than furnaces. But with a heat pump, you don’t need an air conditioner in the summer. With furnaces, you have to pay that extra.
  • Energy Efficiency. Heat pumps are more energy-efficient than furnaces.
  • Cost Efficiency. Compared to furnaces, heat pumps can save you money. But the energy source – gas, propane, electricity – is a major factor. Below, you will find a ‘Heat Pump Vs Gas Furnace Running Cost Calculator’ that estimates the operating costs of furnaces and heat pumps.
    furnace vs heat pump cost calculator
    Example of how to use the dynamic heat pump running cost calculator with specific BTU capacity, HSPF rating, and electricity price. You will find this calculator in the #6 chapter.
  • Lifespan. Furnaces last for 20-30 years while heat pumps last for 10-15 years.

To determine if heat pumps are better than furnaces (or furnaces are better than heat pumps), we need to understand how both of them work, what are the advantages and disadvantages of both systems, and so on.

Here’s why:

Furnaces are better for extremely cold weather. Heat pumps are better for smaller homes and areas with low electricity prices. There is no general clear-cut answer which is better: a furnace or heat pump. It all comes down to your specific situation.

Let’s do this in a structured way:

We will cover all 14 major differences between furnaces and heat pumps point-by-point, spec-by-spec. You can find the summarized ‘Furnace VS Heat Pump’ comparison table at the end.

Let’s start by looking at how furnaces and heat pumps operate:

1. What Are Furnaces And Heat Pumps (Differences In Mechanism Of Action)

Furnaces and heat pumps have a very different operational processes. Here’s how they work:

How Do Gas Furnaces Work? (+ Distribute Hot Air)

Gas furnaces generate heat by burning natural gas or propane. When you turn on a gas furnace, the gas inside the furnace (located in the combustion chamber) is ignited and the gas is starting to combust or ‘burn’. Some gas furnaces have a pilot light ignition, others have electronic ignition.

Besides the ignited, here are the 4 parts every gas furnace needs to have:

  1. Combustion chamber. Here is where the gas is ‘burning’. This produces heat.
  2. Heat exchanger. The heat produced by combustion needs to be used to heat indoor air. This happens at the heat exchanger. The exchanger is a basically thin metal shield standing between the combustion chamber and the blower. Its main function is to heat up the air.
  3. Blower fan. All the heater air has to be moved around the house (usually using a ducted system). A blower fan propels the heated air into the air ducts and allows for the heater air to be distributed throughout your house.
  4. Vent flue. Gas combustion is not a 100% efficient system (the most efficient gas furnaces have up to 97 AFUE rating). All the remaining fumes (CO2, carbon waste, and so on) have to be vented outside the house. Vent flue is used to channel these harmful combustion side products out of the house via a chimney or vent pipe.

As you can see, the furnace works by utilizing the energy created by gas combustion and distributes it throughout the house via HVAC ducts.

In contrast, heat pumps have quite a dissimilar mode of operation. Let’s look into that:

How Do Heat Pumps Work? (+ Distribute Hot/Cold Air)

Heat pumps are not gas combustion appliances; they run solemnly on electricity. In contrast to furnaces, they don’t heat homes by extracting the energy hidden in natural gas.

Instead, heat pumps do exactly what the name suggests: they pump heat. In the winter, they pump the available heat (even at low temperatures) from the outside to indoors and heat your house. In the summer, they pump the available heat indoors towards outdoors and provide cooling.

As a result of how heat pumps work, here is one key advantages of heat pumps over furnaces:

Heat pumps can be switched to cooling in the summer. Furnaces, on the other hand, can only provide heating.

In fact, they use pretty much the same principle as air conditioners. Refrigerant (R32 or R410A, for example) is used to absorb all the outdoor heat available, and transfer it through refrigerant lines and expansion/compression system indoors.

Here are the 4 parts every heat pump is made out of:

  1. Outdoor unit. Here the condenser coil, with the help of a compressor, absorbs the available heat (even in winter, but not at extremely low temperatures).
  2. Indoor unit/s: air handlers. To distribute the absorbed heat and heat your house, heat pumps use indoor air handlers. Every air handler includes a blower fan that blows over the hot refrigerant coils and delivers hot air into your home. You can have several air handlers per 1 outdoor unit and you can position them in any way you like; this heats up your home more evenly.
  3. Refrigerant lines. To connect the outdoor unit to the indoor air handlers, you need a set of refrigerant lines that go through the walls. These are used to channel the refrigerant, and with it, the heat (in winter) and cooling (in summer).
  4. Reverse valve. To switch from heating to cooling, you will need to switch the direction of refrigerant flow. For the switch, you will need a reverse valve that ensures the heat pump with heat in the winter and cool in the summer.

Note: Heat pumps are mini-splits. That means that the outdoor and indoor units are separate. The advantage of mini-split heat pumps is that they are ductless; you don’t need HVAC ducts to use them.

All this process is enabled by the actions of the outdoor compressor, refrigerant flow, and indoor blower fans; and all of them use electricity.

That brings us to the 2nd key difference between heat pumps and furnaces:

2. Energy Source (Furnaces Use Gas/Electricity, Heat Pumps Use Only Electricity)

It’s important to note that, in most cases, furnaces and heat pumps have different energy sources. That’s what results in different energy efficiency, cost efficiency, running costs, and will ultimately help us answer if it’s cheaper to run a heat pump compared to a furnace.

Here’s the deal:

Furnaces can run on natural gas, propane, oil, or electricity. You can read more about gas furnaces here, oil furnaces here, and electric furnaces here. By a large margin, natural gas furnaces are the most popular ones. Our furnace vs heat pump analysis here is predominantly using gas furnaces as a reference point.

Heat pumps run only on electricity. There is no gas heat pump, nor a propane-powered heat pump. As a result of the heat pump’s mechanism of action we covered earlier, electricity is all that is needed to run a heat pump.

3. Heating Capacity (Furnaces Produce More Heat Than Heat Pumps)

Heating capacity is basically how much heat can a furnace or heat pump generate. We measure the capacity in tons or BTU/h (British Thermal Units). Here’s the conversion: 1 ton = 12,000 BTU/h.

Heat pumps can produce anywhere from 9,000 BTU (0.75-ton) to about 60,000 BTU (5-ton) of heating output. These are enough for areas (8 ft ceiling) from about 200 sq ft to 1,400 sq ft.

Furnaces, on the other hand, can produce anywhere from 24,000 BTU (2-ton) to more than 120,000 BTU (10-ton) of heating output. Furnaces are used to heat houses with square footage anywhere from 500 sq ft to 3,000 sq ft.

In short, furnaces produce more heat and can be used to heat bigger houses on their own. That’s because gas combustion provides for a vast amount of heating energy quickly as opposed to electricity-powered heat pumps.

Of course, in many homes, the top heating capacity doesn’t matter all that much. Example: If you have a 1,000 sq ft home and you’re trying to decide which is the better option – a gas furnace or a heat pump – you don’t really have to take the top heating capacity into account. That’s because both gas furnace and heat pump can heat up a 1,000 sq ft house.

If you have a 3,000 sq ft house, however, the heat pump won’t be powerful enough to heat up the whole house on its own. In this case, the top heating capacity of furnaces is a decisive advantage over heat pumps.

Note: It’s important to adequately size your heating system. If you need help with that, you can use our furnace sizing calculator here and heat pump sizing calculator here. They will give you an estimate of how big a heating system you need.

4. Heat Distribution (Heat Pumps Distribute Air More Evenly Than Furnaces)

If you’re installing a home heating system, it makes sense to expect your home will be evenly heated. For example, if you set your thermostat temperature to 72°K, you expect you will have that temperature throughout the house.

Sadly, we know that this is not always the case. There are some rooms that are hotter and some rooms that are colder.

When deciding between a furnace and a heat pump, heat distribution plays a role as well. The goal is simple:

Get a system that will heat all the rooms in the house evenly.

Here the heat pumps have the advantage over furnaces.

To distribute heater air, furnaces use the duct system. That means there is a single point of heat generation – the furnace – and the hot air is delivered all over the house via ducts. Depending on the ducts distribution, the temperature in all the rooms might be the same (as set on the thermostat). However, that is more an exception than a rule as far as furnaces are concerned.

In the case of heat pumps, the heating distribution doesn’t derive from a single point of heat generation as is the case with furnaces. That’s because heat pumps are a mini-split system; we use several indoor air handlers as multiple points of heat generation. We can distribute air handlers more evenly, resulting in a very even temperature across all the rooms in our house.

In short, mini-split hot air distribution utilized by heat pumps provides for a more even temperature distribution. The ducted system utilized by furnaces is a disadvantage; not only do you get an uneven temperature distribution, the ductwork also cost a pretty penny to install.

5. Gas Furnace Vs Heat Pump Costs (Unit Cost + Installation)

Without a doubt, heat pumps can be more expensive than furnaces, if you check the unit cost alone.

But you’re never looking at the cost of the new furnace or a heat pump alone; you also have to consider installation costs as well.

All in all, here are the key factors that constitute an upfront cost (we’ll get to the running costs in a bit) of furnaces and heat pumps:

  • Cost of the new unit (usually represents about 50% of the full upfront cost).
  • Installation costs and labor costs (these represent about 40% of the full upfront cost). There are a selected few heat pumps you can install yourself. Example: Mr Cool DIY mini-split heat pumps and air conditioners.
  • Old unit removal costs, extra equipment, permits, etc. (about 10%).
  • Optional: HVAC ductwork costs for gas furnaces.

According to Modernize, the average cost to install a gas furnace ranges from $2,000 to $6,592 (without ductwork). On the other hand, you’re expected to pay anywhere from $1,800 to $7,542 for a ductless mini-split heat pump (with installation).

Of course, the actual cost depends on the size of the unit (6-ton costs more than 3-ton, for example), location, installation difficulty, number of air handlers for heat pumps, and so on. If you need an actual estimate, you can get 4 free quotes from HVAC experts in your area here.

Both heat pumps and furnaces have their own advantages and disadvantages as far as the costs are concerned:

Heat pumps are more expensive than furnaces. But, and that’s a big ‘but’, ductless mini-split units don’t require ductwork. Furnaces do require ducts; if you don’t already have ducts, you are likely to pay several $1,000s on top of the furnace installation costs on ductwork.

Another thing to keep in mind – and we’ll cover that later on – is that furnaces last 20-30 years while heat pumps last for 10-15 years. That means you will have to, on average, get a new heat pump twice in a lifespan of 1 furnace. That’s a pro for furnaces.

Here’s the con for furnaces; they can’t work as air conditioners like heat pumps, and air conditioners can be expensive. If you decided to buy a furnace, you will also need an air conditioner. That’s not the case with heat pumps because every heat pump can work both as a heating system and an air conditioner.

In summary, due to all the pros and cons of furnaces and heat pumps, it’s very hard to tell which is cheaper.

However, we can say, for example, if heat pumps save you money compared to furnaces as far as running costs are concerned. We even created a calculator that estimates how much does running a furnace or a heat pump costs per hour.

But first, let’s familiarize ourselves with the energy efficiency and cost efficiency of furnaces and heat pumps:

6. Different Efficiencies Of Heat Pumps Vs Furnaces (Energy, Cost)

In many cases, the choice between heat pumps vs furnaces comes down to running costs. Which has lower running costs; a heat pump or a furnace?

To look into the running costs, we will use terms ‘energy efficiency’ and ‘cost efficiency’. It’s important to understand the difference. Energy efficiency refers to how efficiently a power source can be used. Cost efficiency includes both energy efficiency as well as the price of the power source (gas costs less than electricity per BTU).

Example: 2-ton heat pump can be more energy efficient (up to 300% efficiency) than a gas furnace (up to 97% efficiency) but because electricity costs more than gas per BTU, the heat pump is less cost-efficient. Hope this makes sense.

Let’s look at energy efficiency first:

Heat Pumps Vs Furnaces Energy Efficiency

What do you get if you open the specification sheet and check under ‘heating efficiency’?

  • With heat pumps, you will get an HSPF rating (something like 8-10 HSPF). HSPF stands for Heating Seasonal Performance Factor.
  • With gas furnaces, you will get an AFUE rating (something like 95 AFUE). AFUE stands for Annual Fuel Utilization Efficiency.

Both are measures of heating energy efficiency. If we want to answer if heat pumps are more or less energy-efficient than furnaces, we need to figure out a common denominator for both of these ratings.

Note: Energy efficiency as defined by laws of thermodynamics tell us that heat pumps can, in ideal conditions, have up to 300% energy efficiency (derived from COP or Coefficient Of Performance). Furnaces can be at most 97% energy efficient.

That would seem clear to physics, but we want to look practically in terms of US dollars. Here’s how we do this:

  • Heat pumps: 10 HSPF tells us that such a heat pump will produce 10,000 BTUs of heating output per kWh.
  • Furnaces: 95 AFUE tells us that such a furnace will extract 95% of all the energy hidden in natural gas.

Let’s say we compare a 5-ton heat pump and a 5-ton furnace. This will illustrate practically how energy-efficient heat pumps vs furnaces are.

A 5-ton unit will generate 60,000 BTU of heating output per hour. With a 10 HSPF heat pump, that means we will have to use 6 kWh (estimated running cost: $0.79/h). We used the national average $0.1319 kWh/h electricity price.

A gas furnace uses natural gas. 1 therm of natural gas contains 100,000 BTU of energy. A 95 AFUE gas furnace extracts 95% of that energy; so 95,000 BTU. To produce 60,000 BTU of energy, we would need this many therms of natural gas:

Therms Of Natural Gas = 60,000 BTU / 95,000 BTU = 0.63 Therms

As we know, the prices of natural gas are quite volatile. The US Energy Information Administration lists the prices of natural gas per 1,000 cubic feet here. The current average price in 2021 is about $15 per 1,000 cubic feet. If we approximate, we can say that 1 therm = 100 cubic feet of natural gas. That means that 1 therm of natural gas costs about $1.50.

In the case of this furnace, we need 0.63 therms to produce 60,000 BTU of heating output. That’s $0.95.

As we can see from this example, the running costs in this example with these specific approximations are:

  • $0.79/h running cost for 60,000 BTU heat pump.
  • $0.95/h running cost for 60,000 BTU furnace.

Obviously, prices of electricity and natural gas can change. Every state has its own prices, and they are changing quite a bit.

To help you estimate the running costs of heat pumps and furnaces, we have prepared two operating costs calculators. You can input the size of the unit, energy efficiency rating (HSPF for heat pumps, AFUE for furnaces, and the price of electricity and natural gas to calculate how much does running a heat pump vs furnace costs:

Heat Pump Vs Gas Furnace Running Cost Calculator

Here you can estimate how much does it cost to run a heat pump and a furnace per hour (at 100% output capacity).

Let’s start with the heat pumps. You insert the capacity of the heat pump, HSPF rating (it’s usually between 8 and 12), and the price of electricity per kWh (the national average is $0.1319/kWh). The calculator will dynamically estimate the running cost of a heat pump:

 

Here is a running cost calculator for furnaces. You insert the capacity of the gas furnace, AFUE rating (it’s usually between 80 and 97), and the price of natural per therm (the current average is about $1.50/therm). The calculator will dynamically estimate the running cost of a furnace:

 

Using these two calculators, you can compare the running costs of heat pumps and gas furnaces of various sizes (BTU capacities), energy efficiencies (HSPF and AFUE ratings), and account for different prices of electricity and natural gas.

7. Lifespan (Furnaces Last Twice As Long As Heat Pumps)

Last but not least, you have to take the lifespan of furnaces vs heat pumps into consideration.

Furnaces last for anywhere between 20 and 30 years. That’s quite a lot.

For comparison, heat pumps last only for 10 to 15 years. Less so.

As far as the lifespan, furnaces have a clear advantage over heat pumps.

However, what you do have to take into consideration, is that the energy efficiency of new furnaces and heat pumps is rising. If you bought a furnace 20 years ago, it likely had a 70 AFUE rating. Upgrading to a new 95 AFUE rating makes sense even if the old 70 AFUE rating furnace works without a problem.

That’s because it makes financial sense to upgrade to a higher energy-efficiency unit; the savings on running costs can pay for themself in 5-15 years.

Comparison Of Heat Pumps Vs Furnaces (12-Point Summary)

We have covered all the key differences between heat pumps and furnaces. As you can see, in some areas, heat pumps are better than furnaces, and in others, furnaces are better than heat pumps.

To help you make an easier decision for your specific situation, we have summarized all the key differences (with advantages and disadvantages) of heat pumps vs furnaces in this table:

Specification Heat Pumps (Gas) Furnaces Comment:
Operating Mechanism: Absorbs outdoor heat and transfers it indoors Utilized gas combustion to produce heating output Heat pumps and furnaces operate in a very different way
Energy Source: Electricity Natural gas (most common), oil, propane, electricity Heat pumps operate solemnly on electricity. Furnaces operate on different fuels
Heating Capacity: 9,000 BTU – 60,000 BTU 24,000 BTU – 120,000 BTU Furnaces are used for bigger houses (higher capacity)
Coverage Area: 200 sq ft – 1,400 sq ft 500 sq ft – 3,000 sq ft Furnaces can cover larger areas
Heat Distribution: Via indoor air handlers Via HVAC ducts Furnaces require ducts, mini-split heat pumps are ductless
Even Temperature: Yes, to a large degree Yes, to a lesser degree Heat pumps are better at ensuring all the rooms have the same temperature
Speed Of Heating: Lower Higher Furnaces can heat up a home faster due to higher capacity
Problems At Very Low Temperatures: Yes No Heat pumps absorb the heat from outside; if the temperatures are really low, heat pumps will struggle to achieve the specified heating output
Cooling Available: Yes No Heat pumps can work as air conditioners; that’s a major pro
Cost Of Installed Unit: $1,800 to $7,542 $2,000 to $6,592 (without ductwork) In general, heat pumps tend to be more expensive
Requires Ducts? No Yes If you don’t have HVAC ducts, the ductwork required for furnaces can be expensive
Energy Efficiency: Up to 300% Up to 97% Heat pumps are much more energy-efficient due to different mode of operation
Cost Per Running Hour: $0.23 – $1.61 $0.34 – $2.73 This depends on the price of electricity and natural gas but heat pumps tend to be less expensive to run
Lifespan: 10-15 years 20-30 years Furnaces last for a lot longer than heat pumps

All in all, you can use this table and all the considerations we talked about to make an informed decision when comparing the suitability of heat pumps vs furnaces for your home.

As we have seen, there is no clear-cut answer to which is better: a furnace or a heat pump. It all comes down to your specific situation.

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