How Much Does a New Furnace Cost?

Furnace Replacement Cost: What to Expect in 2026

A furnace is one of those systems most homeowners never think about until it stops working — and when it does, the cost range across the market is wide enough that it's worth understanding what you're actually paying for before a contractor is standing in your basement with a quote.

TheRemodelers works with licensed HVAC contractors to help homeowners understand what a new furnace costs, what actually drives that price up or down, and what to expect from the installation itself. The HVAC systems guide covers all five major home heating and cooling systems for a broader overview.

If your furnace is still running but you're not sure whether it's worth fixing versus replacing, the guide to furnace repair cost covers that decision directly — this guide is for homeowners who've already decided a new furnace is the right move, or want to understand the cost before making that call. If you're weighing a furnace against a different heating system entirely, the guide to boiler replacement cost covers what that alternative costs and how it works.

What a New Furnace Costs

A new furnace typically costs $2,500 to $8,000 installed, with most homeowners landing in the $4,000 to $6,500 range for a mid-tier gas furnace in an average-sized home. The range is wide because efficiency tier, fuel type, and home-specific factors like ductwork condition all move the number significantly.

These figures include the unit itself, standard installation labor, and typical permit costs. They assume the existing ductwork, gas line, and electrical service are already adequate for the new unit — additional work in any of those areas adds to the total.

What Drives Furnace Cost Up or Down

Efficiency tier is the single biggest cost factor, and it's also the one most worth understanding before you shop. A single-stage furnace runs at full output whenever it's on. A two-stage furnace can run at a lower output most of the time, only ramping to full power on the coldest days, which improves both comfort and efficiency. A variable-speed or modulating furnace adjusts output continuously rather than stepping between fixed levels, delivering the most even temperatures and the highest efficiency — at the highest price.

Fuel type affects both equipment cost and what you'll pay to run it. Gas furnaces are the most common choice where natural gas service is available, generally offering lower operating costs than electric resistance heat. Electric furnaces cost less upfront but more to run in most climates. Oil furnaces are more common in regions without natural gas infrastructure and typically cost more both to install and to operate.

Furnace size — measured in BTUs — needs to match your home's actual heating load, not just its square footage. An oversized furnace cycles on and off more frequently, which wears out components faster and creates less consistent comfort than a properly sized unit running longer cycles. A qualified installer calculates this using a Manual J load calculation rather than a rule-of-thumb square-footage estimate.

Ductwork condition matters more than most homeowners expect. If existing ducts are undersized, leaky, or poorly configured for the new furnace's airflow requirements, modifying them adds real cost to the project — sometimes a meaningful fraction of the furnace cost itself. A contractor who inspects the ductwork before quoting, rather than after the old furnace is already out, is giving you a more accurate number upfront.

Regional labor rates and local permit costs vary meaningfully across the country, similar to most home improvement projects — installations in higher cost-of-living areas typically run toward the upper end of these ranges even for identical equipment.

Furnace Efficiency Tiers Explained

AFUE — Annual Fuel Utilization Efficiency — measures what percentage of the fuel a furnace burns actually becomes heat in your home, with the rest lost to venting and combustion inefficiency. An 80% AFUE furnace converts 80 cents of every fuel dollar into heat; a 96% AFUE furnace converts 96 cents.

Federal minimum efficiency standards have pushed most new gas furnaces to 80% AFUE or higher, and many regions now require 90%+ as the minimum for new installations. High-efficiency furnaces (90% AFUE and above) cost more upfront but burn less fuel over the furnace's lifespan, and in colder climates with longer heating seasons, that difference can offset a meaningful share of the higher purchase price over time. In milder climates with shorter heating seasons, the payback period stretches out considerably, and a mid-efficiency unit is often the more practical choice financially.

Gas vs. Electric vs. Oil Furnaces

Gas furnaces dominate the market where natural gas service is available, generally offering the lowest operating cost per unit of heat and widely available service and parts. Electric furnaces cost less to purchase and install, have no combustion byproducts to vent, and work anywhere with adequate electrical service — but electricity typically costs more per unit of heat than gas in most markets, meaning higher monthly bills over the furnace's lifespan. Oil furnaces remain common in parts of the Northeast and other regions without widespread gas infrastructure; they cost more to install and operate than gas, but remain the practical choice where gas simply isn't an option.

Sizing: Why Bigger Isn't Better

It's a common assumption that a bigger furnace heats a home better or faster. In practice, an oversized furnace short-cycles — it heats the space quickly, shuts off, and then has to restart again shortly after, rather than running a longer, steadier cycle. This creates larger temperature swings, more wear on the blower motor and ignition components, and worse humidity control in the home. A correctly sized furnace, determined by a Manual J load calculation that accounts for square footage, insulation levels, window count and orientation, and local climate, runs longer and steadier cycles that are both more comfortable and easier on the equipment over its lifespan.

The Installation Process: What to Expect

A standard furnace replacement typically takes a single day for a straightforward swap where the new unit fits the existing space and connections. The crew removes the old furnace, makes any necessary modifications to ductwork, gas or electrical connections, and venting, sets and connects the new unit, and tests the system before leaving. More involved installations — a fuel-type change, significant ductwork modification, or a venting system change for a higher-efficiency furnace — can extend the timeline to two or three days.

Most jurisdictions require a permit for furnace replacement, and many require a follow-up inspection to confirm the installation meets current code. A legitimate contractor includes the permit in their quote and handles scheduling the inspection, rather than leaving it to the homeowner or skipping it entirely.

Warranty Considerations

Furnace warranties typically separate into two parts: a manufacturer's parts warranty, commonly 10 years on major components when the unit is properly registered after installation, and a separate labor warranty from the installing contractor, which varies significantly by company and is worth confirming in writing before the job starts. Missing the manufacturer's registration deadline — often 60 to 90 days after installation — can reduce the parts warranty to a much shorter default period, so confirming registration is handled (and by whom) is worth asking about directly.

What to Look for When Hiring a Furnace Installer

Ask for a Manual J load calculation rather than a sizing estimate based on the old furnace or square footage alone — proper sizing affects comfort, efficiency, and equipment lifespan more than almost any other decision in the project.

Ask whether the quote includes ductwork inspection and what happens if modifications turn out to be necessary once the old unit is out — a contractor who addresses this upfront is giving you a more realistic total cost than one who quotes the furnace alone and treats ductwork as a separate surprise.

Get the labor warranty terms in writing, and ask specifically who handles manufacturer warranty registration and by what deadline, since missing that step can significantly shorten your parts coverage without you realizing it happened.

Confirm the permit and inspection process is included in the quote, not treated as an optional add-on — in most jurisdictions this isn't optional for a furnace replacement regardless of what any individual contractor tells you.

Final Thoughts

A new furnace is a real investment, and the efficiency tier you choose affects both the upfront cost and what you'll pay to run it for the next 15 to 20 years. Getting the sizing right, understanding what ductwork condition might add to the project, and confirming warranty terms in writing before work begins are the details that separate a straightforward, well-executed installation from one that causes problems for years afterward. Once the new furnace is in, the guide to furnace maintenance covers what regular maintenance actually involves and how it protects both the warranty and the investment itself.

When you are ready to get estimates from licensed contractors in your area, contact Home Services Pros to connect with professionals who offer free no-obligation assessments.

Frequently Asked Questions

How much does it cost to replace a furnace?

A new furnace typically costs $2,500 to $8,000 installed, with most homeowners paying $4,000 to $6,500 for a mid-tier gas furnace. Cost depends primarily on efficiency tier, fuel type, and whether existing ductwork needs modification.

What is a good AFUE rating for a furnace?

Most new gas furnaces are required to meet at least 80% AFUE, with many regions now requiring 90% or higher as the minimum for new installations. High-efficiency furnaces run 90% to 98% AFUE and cost more upfront but burn less fuel over their lifespan, which matters more in colder climates with longer heating seasons.

Is a bigger furnace always better?

No. An oversized furnace short-cycles, heating quickly and shutting off repeatedly rather than running longer, steadier cycles. This creates larger temperature swings, more equipment wear, and worse humidity control than a correctly sized furnace determined by a proper load calculation.

How long does furnace installation take?

A standard replacement typically takes one day when the new furnace fits the existing space and connections. Installations requiring ductwork modification, a fuel-type change, or new venting for a high-efficiency unit can take two to three days.

Is gas or electric better for a furnace?

Gas furnaces generally offer lower operating costs where natural gas service is available. Electric furnaces cost less to purchase and install but typically cost more to run per unit of heat in most markets, resulting in higher monthly bills over the system's lifespan.

Do I need a permit to replace a furnace?

Yes, in most jurisdictions. A permit and follow-up inspection confirm the installation meets current code. A legitimate contractor includes this in their quote and handles scheduling rather than leaving it to the homeowner.

What warranty should come with a new furnace?

Expect a manufacturer's parts warranty, commonly around 10 years on major components when properly registered, plus a separate labor warranty from the installing contractor that varies by company. Confirm registration deadlines and labor warranty terms in writing before installation begins.