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A furnace makes heat. A heat pump moves heat. That one difference affects almost everything homeowners care about: installation cost, utility bills, comfort, backup heat, electrical work, permits, and whether the same system can cool the house in summer.
For most U.S. homes in 2026, the right choice is not automatic. A heat pump can be a smart upgrade when you also need air conditioning, live in a moderate climate, have expensive propane or oil, have solar, or want to reduce onsite combustion. A gas furnace can still be the practical answer in very cold areas with low natural-gas prices, older homes with limited electrical service, or houses where ductwork and insulation are not ready for a heat pump. A dual-fuel system often gives the best of both: heat pump operation during mild weather and a gas furnace during deep cold or high electric-rate periods.
On our job sites, the expensive mistakes usually happen when someone compares equipment labels instead of the whole house. Square footage alone is not enough. We look at the home’s heat loss, duct condition, electrical panel, gas service, climate, utility rates, and whether the cooling system is also being replaced. That is the difference between buying a box and buying a system that actually performs.
Heat Pump vs. Furnace: The Short Version
A furnace burns fuel, usually natural gas, propane, or oil, or uses electric resistance coils to create heat. A blower then pushes warm air through ducts. A furnace is a heating appliance only, so most furnace homes also need central air conditioning, a mini-split, or another cooling system for summer.
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- Before buying, please confirm whether the product is compatible with your system, and check the size of the product to see if it can cover the traces left on the wall of the old thermostat.
- Aowel AW721 non programmable heat pump thermostat for house up to 2 heating and 1 cooling multi-stage systems.
- Compatible with Heat Pump systems (with aux or emergency heat) and Heat Pump (without auxiliary/backup heat) systems, up to 2 Heat/ 1 Cool. 【the Menu Initialize Heat Pump System】
- Compatible with most 24V conventional single-stage systems (i.e. conventional force air, central gas, oil, electric furnaces single-stage system, up to 2 Heat/ 1 Cool ). 【Note: You need to enter the menu and set it to conventional system】
- 【WARNING】1. Does not work with conventional multistage systems, mini split systems and 12v rv thermostats. ( 2. Not compatible with 110-240V electric heat systems (like electric baseboard heat, line voltage, convectors, radiant-ceiling heat).
An air-source heat pump uses a refrigeration cycle to move heat. In summer, it works like an air conditioner and moves heat out of the house. In winter, it reverses and pulls heat from outdoor air into the house, even when the air feels cold. A well-matched heat pump provides both heating and cooling.
Furnace efficiency is rated by AFUE. A 96% AFUE furnace turns about 96% of the fuel energy into delivered heat, with the rest lost through exhaust and operation. Heat pump heating performance is commonly discussed as COP or HSPF2. A heat pump with a COP of 3 delivers about 3 units of heat for each unit of electricity consumed. Depending on outdoor temperature and equipment quality, heat pumps can deliver roughly 2 to 4 units of heat per unit of electricity.
| Category | Heat Pump | Furnace |
|---|---|---|
| How it heats | Moves heat from outdoors to indoors | Creates heat by combustion or electric resistance |
| Cooling | Yes, heating and cooling in one system | No, usually paired with central AC |
| Efficiency rating | SEER2/EER2 for cooling; HSPF2/COP for heating | AFUE for heating |
| Typical installed cost in 2026 | About $4,500 to $12,500 for many air-source systems; larger whole-home projects can reach $17,000 to $30,000 | About $4,000 to $10,000 for many gas furnace replacements |
| Best fit | Moderate climates, AC replacement, solar homes, propane/oil conversions, electrification plans | Cold climates with cheap gas, homes with existing gas infrastructure, limited electrical capacity |
| Main caution | Needs correct sizing, airflow, backup strategy, and electrical review | Needs combustion safety, venting, gas piping, and usually separate cooling |
How Each System Works
What a furnace does
A gas furnace uses a burner and heat exchanger. Combustion gases stay inside the heat exchanger and vent outdoors, while indoor air passes across the hot metal and enters the duct system. The supply air from a furnace is usually hot enough that homeowners feel quick warmth at the registers.
Common residential gas furnaces are 80% AFUE or 90% to 98% AFUE. An 80% unit usually vents through metal flue pipe. A high-efficiency condensing furnace commonly vents through PVC or approved plastic venting and produces condensate that must drain properly. That venting and drain work can add cost during replacement, especially in basements, tight utility closets, townhomes, or homes with long vent runs.
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A heat pump has an outdoor unit and an indoor air handler or coil. In cooling mode, it behaves like central AC. In heating mode, a reversing valve changes refrigerant flow so the system extracts heat from outdoor air and releases it indoors. That is why one heat pump can replace both an air conditioner and a heating system in the right house.
Cold-climate air-source heat pumps have improved significantly. Qualified cold-climate models are tested for low-temperature heating performance at 5 degrees Fahrenheit. That does not mean every heat pump is right for every northern home. It means the contractor must look at the unit’s capacity at the local design temperature, not just the big number on the brochure.
What dual fuel means
A dual-fuel system pairs an electric heat pump with a gas furnace. The heat pump handles cooling and mild-weather heating. The furnace takes over below a set outdoor temperature, during high electric-rate periods, or when the heat pump cannot meet the home’s full load efficiently.
Dual fuel is often a strong option for gas-served homes where the air conditioner is old but the homeowner does not want to rely on electric backup strips during cold snaps. It costs more upfront because you are integrating both systems, but it can preserve furnace performance while gaining heat pump efficiency for shoulder seasons.
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National averages are useful only as a starting point. HVAC pricing changes quickly by region, access, equipment tier, and scope. A clean replacement in an open basement is not the same job as a heat pump retrofit in a 1920s house with attic ducts, a 100-amp panel, and no spare breaker space.
| Project Type | Common 2026 Installed Range | What Can Push It Higher |
|---|---|---|
| Air-source heat pump | $4,500 to $12,500 for many systems; $6,000 to $25,000 in broader manufacturer guidance | Variable-speed equipment, larger capacity, long line sets, duct repairs, electrical upgrades, difficult access |
| Larger whole-home heat pump retrofit | $17,000 to $30,000 in some modeled whole-home projects | Panel upgrade, new ducts, multiple zones, insulation or air-sealing coordination |
| Single-zone ductless mini-split | Often lower than whole-home ducted systems | Long refrigerant runs, wall repair, condensate pump, multiple indoor heads |
| Gas furnace replacement | $4,000 to $10,000 | 95% to 98% condensing unit, venting changes, gas piping, zoning, difficult attic or crawlspace work |
| Gas furnace plus central AC | Often $4,000 to $13,000 nationally, more in high-cost markets | Matched high-efficiency AC, coil replacement, refrigerant line changes, duct corrections |
| Dual-fuel heat pump plus furnace | Commonly $8,000 to $14,000 or more | Controls integration, premium inverter heat pump, high-efficiency furnace, duct and electrical work |
The fair comparison is not always heat pump versus furnace. If your furnace is dead but your air conditioner is 3 years old, a furnace-only replacement may be the lower-cost repair. If your furnace and AC are both 15 to 20 years old, a heat pump may compete against replacing two systems. If you heat with propane or oil, the operating-cost side may change enough to justify a higher upfront cost.
Ask for quotes that spell out the scope. We want to see equipment model numbers, AHRI match information, thermostat and controls, line-set work, duct changes, electrical work, condensate routing, permits, startup readings, warranty terms, and rebate paperwork. A vague one-line quote is not enough for a five-figure mechanical project.
Rank #2
- Heat pump thermostat for home, non programmable, 2 heating and 1 cooling, electric or gas/oil configurable. (TIP: before purchasing, check to see if this thermostat is compatible with your old thermostat)
- Compatible With: Heat pump systems and Conventional force air, central gas, oil, or electric furnaces systems, Does NOT work with electric baseboard heat (120-240V).
- Not Compatible with 110-240V HVAC systems: like 120/240v electric baseboard heat and line voltage systems. and Not compatible with RV thermostat.
- Easy to read and use: Large digital display with large characters and green backlight, separate buttons for easy setpoint temperature, very suitable for middle-aged and elderly people to use.
- It gives precise temperature control with +/- 1 degree in Fahrenheit and Celsius for ultimate consistent control to keep your room comfortable all the time.
Which Is Cheaper to Run?
Operating cost depends on local energy prices and delivered efficiency. Natural gas often looks cheap on a raw Btu basis, but a furnace is not 100% efficient. Electricity often costs more per raw Btu, but a heat pump can deliver multiple units of heat per unit of electricity. Regional rates vary widely across the United States, so national averages can mislead homeowners in New England, California, the South, Mountain states, and gas-producing regions.
Use your own utility bills and this simple math:
Heat pump cost per million Btu = electricity price per kWh x 293 / COP
Gas furnace cost per million Btu = gas price per therm x 10 / AFUE
Example: if electricity costs $0.16 per kWh and the heat pump averages a COP of 3, delivered heat costs about $15.63 per million Btu. If gas costs $1.40 per therm and the furnace is 96% AFUE, delivered heat costs about $14.58 per million Btu. In that case, gas is slightly cheaper. If the heat pump averages COP 3.5, the heat pump drops to about $13.39 per million Btu. If gas is $2.00 per therm, the furnace rises to about $20.83 per million Btu.
That is why the same equipment can be a money-saver in one ZIP code and a disappointment in another. The variables that matter most are electric rate, gas or propane price, heat pump COP at local winter temperatures, duct leakage, insulation, thermostat settings, defrost cycles, auxiliary heat use, and time-of-use electric rates.
Watch electric backup heat. Resistance heat strips are useful for emergency heat and peak-load support, but they operate around COP 1. If the thermostat triggers strips too often, the power bill can jump. Good design sets the balance point and auxiliary lockout carefully.
Comfort Differences Homeowners Actually Notice
A furnace delivers hotter supply air and often runs in shorter, stronger cycles. That feels familiar: the register blows warm, the room temperature rises, and the system shuts off.
A heat pump is designed to run longer and steadier at lower supply-air temperatures. That can feel less dramatic, but it often produces more even room temperatures when the system is sized and commissioned correctly. Homeowners sometimes think the heat pump is blowing cool air because the supply air is cooler than a furnace’s blast, even though it is still warming the house.
Thermostat habits matter. With a furnace, a large nighttime setback may recover quickly. With a heat pump, aggressive setbacks can trigger auxiliary heat, which can wipe out savings. In many heat pump homes, a smaller setback of 2 to 4 degrees or a steady setpoint performs better than dropping the house 8 degrees overnight.
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Ductwork matters as much as the equipment. Heat pumps need good airflow. We routinely check return sizing, filter rack restrictions, static pressure, duct leakage, and whether attic or crawlspace ducts are insulated and sealed. A new heat pump connected to undersized, leaky ducts will not deliver its rated performance.
Climate: Where Heat Pumps Win, Where Furnaces Still Make Sense
Moderate and mixed climates
In much of the South, Mid-Atlantic, Pacific Northwest, and milder parts of the Midwest, a properly selected heat pump can be the primary heating and cooling system. These climates give the heat pump many hours of operation in its high-efficiency range, especially during fall, spring, and mild winter days.
Rank #3
- · Not Compatible: Two transformer systems, Conventional multi-stage systems, Dual fuel/hybrid heating, Electric baseboard heat (110-240 volts), Line voltage, Convectors, Radiant-ceiling heat, Mini split systems and 12V RV systems.
- · Easy to Install and Use: Large terminal blocks with universal sub-base, can be installed within 30 minutes, clear, easy-to-read backlight LCD display and easy controls make for a user-friendly experience.
- · Dual Power Supply: Can be powered by 24VAC power or 2 AAA batteries, No common wire (C-wire) required on most systems (only required on heat only and cool only systems).
- · Simple but Powerful Control: Easy-access front-load battery compartment, adjustable temperature differential (swing) for energy optimization and maximum system life, Support temperature
- · High Compatibility: Heat pump multi-stage systems or conventional single-stage systems, Forced air (gas, oil or electric), Electric furnace, Hot water steam or gravity radiant heat, Heat only systems, Heat pump w/o or with auxiliary or emergency heat, Millivolt conventional systems, Gas fireplaces (24V), Floor or wall furnaces, Cool only systems.(TIP: Before purchasing, check to see if this thermostat is compatible with your system.) auxiliary or emergency heat, Millivolt, Gas fireplaces (24V), Floor or wall furnaces, Cool only systems.(TIP: Before purchasing, check to see if this thermostat is compatible with your system.)
Cold climates
Cold-climate heat pumps can work in northern homes, but the details matter. We look for equipment capacity at 5 degrees Fahrenheit or at the local winter design temperature, not just nominal capacity at mild test conditions. The outdoor unit should be elevated above snow level, have room for drainage during defrost, and be placed where roof runoff and drifting snow will not bury it.
The design also needs a backup plan. That can mean electric auxiliary heat, a retained gas furnace, hydronic backup, or a staged dual-fuel setup. The question is not simply, “Will the heat pump run when it is cold?” The better question is, “Will it carry the home’s heating load at the design temperature without expensive backup operation?”
Propane and oil homes
Homes using propane or oil often deserve a hard look at heat pumps. Delivered heat from those fuels can be expensive, and many older systems are paired with aging central AC or no cooling at all. A ducted or ductless heat pump can reduce fuel deliveries, add air conditioning, and improve shoulder-season comfort.
Cheap natural gas homes
If your home already has reliable natural gas and very low gas rates, a high-efficiency furnace can remain financially strong. In those cases, dual fuel may be better than full replacement: use the heat pump when outdoor temperatures are moderate and switch to gas when the economics favor the furnace.
Electrical, Ductwork, and House Readiness
A furnace replacement may need gas piping, venting, condensate, and combustion-air work. A heat pump conversion may need electrical capacity, refrigerant line routing, outdoor-unit placement, condensate management, and sometimes duct upgrades. Neither job should be treated as plug-and-play.
Older homes with 100-amp electrical service can be tight if the project includes a heat pump, electric auxiliary strips, an electric water heater, induction range, EV charger, or future electrification plans. Some heat pump installations fit within existing service. Others need a panel upgrade, load calculation, smart load management, or a dual-fuel approach that avoids large electric heat strips.
Duct sizing can surprise homeowners. A duct system that was tolerable for a furnace may not move enough air for efficient heat pump cooling and heating. Common problems include undersized returns, restrictive filter grilles, crushed flex duct, leaky attic ducts, poor register placement, and high static pressure. Those issues increase noise, reduce capacity, and shorten equipment life.
Before approving a system, we want a Manual J load calculation, not a rule-of-thumb tonnage guess. For ducted systems, we also want the contractor to evaluate duct capacity and static pressure. For equipment selection, the indoor and outdoor components should be AHRI-matched so the rated performance is legitimate.
Safety, Permits, and Code Considerations
Furnaces involve combustion. That means carbon monoxide safety, proper venting, gas piping, combustion air, condensate neutralization where required, and correct clearances. A cracked heat exchanger, blocked flue, or sloppy vent installation is not a minor defect. Carbon monoxide alarms belong in the home, but they are not a substitute for correct installation and maintenance.
Heat pumps remove onsite combustion from the heating appliance, which eliminates flue-gas and CO risk from that equipment. They still require professional refrigerant handling, electrical work, overcurrent protection, disconnects, condensate routing, and proper outdoor-unit placement. Refrigerant lines should be pressure-tested, evacuated correctly, and charged according to manufacturer specifications.
The Tool Desk
Outbyte Driver Updater FREEScan for outdated or missing drivers - takes under a minuteDriver Scan →Outbyte PC Repair FREERepair Windows errors before they cause bigger problemsFix Now →Most furnace, central AC, and heat pump replacements require a mechanical permit, and electrical work may require a separate electrical permit. Local rules vary, but homeowners should assume that a system replacement needs permit handling unless the local building department clearly says otherwise. Newer energy codes also continue pushing better equipment performance and building efficiency, especially in states with aggressive energy standards.
Rank #4
- Installation Caution: Buyers should carefully review the detailed installation and wiring instructions in the images before making a purchase. It is advisable to proceed with caution if you do not have prior installation experience to prevent issues such as malfunction and incompatibility due to purchasing the wrong item
- Suuwer S721 non-programmable heat pump thermostat for home, up to 2 heating and 1 cooling multi-stage systems. Display with blue backlight, large clear backlit digital display, very suitable for middle-aged and elderly people
- System Compatibility: Compatible with Heat Pump systems (with aux or emergency heat) and Heat Pump (without aux) systems. Compatible with most 24V conventional single-stage systems (i.e. conventional force air, central gas, oil, or electric furnaces single-stage systems) up to 2 heat 1 cool
- System Incompatibility: Not compatible with 110-240V electric heat systems (like electric baseboard heat, line voltage, convectors, radiant-ceiling heat). Does not work with conventional multistage systems (2H/2C 3H/2C 4H/2H), and mini split systems and 12v rv thermostats
- Dual Power Options: Dual powered by 24VAC Power or 2 AAA Batteries. Features easy wire coded terminal blocks with designations R, G, Y, C, O, B, W/E, W2.
A permit is not paperwork for its own sake. It creates a record of the installation, requires code compliance, and can matter during resale, insurance claims, or warranty disputes. Ask the contractor who pulls the permit, what inspections are included, and whether permit fees are in the quote.
Independent reader supportYour contribution helps us test, update, and keep practical guides available for everyone.Rebates and Tax Credits in 2026
Incentives are changing, so do not let a salesperson build the whole financial case around a credit that may not apply. The federal 25C Energy Efficient Home Improvement Credit supported qualified heat pumps at 30% up to $2,000 for installations through December 31, 2025. For 2026 projects, homeowners should verify current IRS guidance before counting on federal savings.
State, local, utility, and income-qualified rebate programs may still be available and can be substantial. Some programs require specific equipment ratings, approved contractor networks, pre-approval before installation, Manual J documentation, or proof that the system is listed in a qualifying database. If rebate money matters to your decision, get the requirements in writing before the equipment is installed.
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Keep the invoice, AHRI certificate, model numbers, permit record, paid receipts, and manufacturer documentation. Those records are useful for rebates, taxes, warranties, and future service.
Best Choice by Situation
If only the furnace failed
If the air conditioner is newer and the gas furnace failed, replacing the furnace may be the most practical move. Still, price a dual-fuel option if the outdoor AC unit is near midlife or if utility rates make heat pump operation attractive.
If the furnace and AC are both old
This is where a heat pump deserves serious consideration. Replacing both a furnace and central AC can overlap with heat pump pricing, and a heat pump may simplify the system while providing efficient heating and cooling.
If you are building new
New construction is often the cleanest opportunity for heat pumps. The builder can design the envelope, ducts, electrical service, equipment location, and backup strategy together. That is easier than forcing new equipment into old constraints.
If you live in a cold climate
Look at cold-climate ENERGY STAR heat pumps, capacity at 5 degrees Fahrenheit or local design temperature, outdoor-unit snow clearance, defrost drainage, and backup heat. Dual fuel may be the most resilient option for gas-served cold-climate homes.
If you use propane or oil
A heat pump can reduce fuel use sharply, especially during mild and shoulder-season weather. Ductless mini-splits can also help in additions, bonus rooms, and older houses without good duct access.
If your electrical panel is limited
Do not assume full electrification is simple. Have an electrician or qualified HVAC contractor review service size, panel capacity, heat strip requirements, and load-management options. A dual-fuel system may avoid a costly service upgrade.
When to DIY vs. When to Hire a Pro
Heat pump and furnace installation is professional work. Refrigerant handling, gas piping, venting, combustion safety, high-voltage wiring, controls, duct transitions, and commissioning are not good DIY projects. Mistakes can create carbon monoxide hazards, refrigerant leaks, electrical faults, frozen coils, nuisance shutdowns, high utility bills, and denied warranties.
Best Value
- CUSTOMIZE: Choose to receive change air filter reminders, coordinate with your home decor thanks to the interchangeable decorative accent pieces (comes with white and gray options), and select display settings to optimize this thermostat for home
- SCHEDULE: Personalize programming in 7 day, 5-1-1 day, 5-2 day or 1 week options - there's even a non-programmable option. The RTH22B is a replacement for the RTH5160 for applications up to 2 heat, 2 cool conventional or 2 heat, 1 cool heat pump The RTH22B is a replacement for th the RTH6360 for applications up to 2 heat, 2 cool conventional or 2 heat, 1 cool heat pump
- EXPERIENCE: A large screen and clear font enhance daily use
- INSTALLATION: The Honeywell Home UWP wall plate provides an easy install process and simplifies future device upgrades
- FEATURES: Flexible scheduling, backlit display, custom display settings, change filter reminder, extended 32°F low-heat setpoint, 1-year warranty
There are still useful homeowner tasks. You can replace filters, keep outdoor heat pump units clear of leaves and snow, maintain 18 to 24 inches of service clearance where the manufacturer requires it, keep supply and return registers open, check thermostat schedules, and document utility costs before and after replacement. You can also gather 12 months of electric and gas bills before asking for bids.
Hire a pro for load calculations, equipment selection, duct modifications, electrical work, gas and venting work, refrigerant charging, permits, and startup. A proper commissioning visit should include measured airflow or static pressure, temperature split or heating performance checks, refrigerant charge verification, thermostat setup, auxiliary heat settings, and warranty registration.
Questions to Ask Your Contractor
Before you sign, ask direct questions and expect direct answers:
- What is the Manual J heating and cooling load for my home?
- What is the heat pump’s capacity at 5 degrees Fahrenheit or our local design temperature?
- At what outdoor temperature will backup heat or the furnace take over?
- Are the indoor and outdoor units AHRI-matched?
- What duct repairs, return-air changes, or static-pressure issues are included?
- Will my electrical panel support the heat pump and any auxiliary heat?
- Who pulls the mechanical and electrical permits?
- What rebates or tax documents will you provide?
- What operating-cost assumptions are you using for electricity, gas, propane, or oil?
- What startup readings will I receive after installation?
Bottom Line
A heat pump is not automatically better than a furnace, and a furnace is not automatically outdated. A heat pump is often the better whole-system choice when it replaces both heating and cooling, when winters are moderate, when propane or oil is expensive, or when the homeowner is planning around solar and electrification. A furnace can still be the right tool where natural gas is inexpensive, the climate is severe, electrical capacity is limited, or the existing system needs a focused replacement.
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The best decision comes from comparing delivered operating cost, installed scope, home readiness, and comfort expectations. Get the load calculation. Check the ducts. Review the electrical panel. Confirm permits. Then compare the full system, not just the equipment price.
Frequently Asked Questions
What is the main difference between a heat pump and a furnace?
A furnace creates heat by burning fuel or using electric resistance. A heat pump moves heat with a refrigeration cycle and can provide both heating and cooling.
Is a heat pump cheaper to run than a gas furnace in 2026?
It depends on local rates and efficiency. Compare heat pump cost per million Btu using electricity price x 293 / COP against gas furnace cost using gas price x 10 / AFUE.
Can a heat pump replace a furnace in a cold climate?
Yes, in many homes, but it must be a cold-climate model sized for capacity at 5 degrees Fahrenheit or the local design temperature, with a clear backup heat strategy.
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Do I need backup heat with a heat pump?
Many homes need backup heat for extreme cold, defrost cycles, or emergency operation. Backup may be electric heat strips, a gas furnace in a dual-fuel system, or another existing heat source.
How much does it cost to install a heat pump vs. a furnace?
In 2026, many air-source heat pump installs run about $4,500 to $12,500, with larger whole-home projects reaching $17,000 to $30,000. Gas furnace replacement commonly runs about $4,000 to $10,000.
Do I need a permit to replace a furnace with a heat pump?
Usually, yes. HVAC replacement commonly requires a mechanical permit, and heat pump conversions may also require an electrical permit. Local requirements vary, so confirm with the contractor and building department.
Quick Recap
Product prices and availability are accurate as of the date/time indicated and are subject to change. Any price and availability information displayed on Amazon at the time of purchase will apply.
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