Furnace Installation & Buying Guide: Types of Furnaces, How to Choose the Right Furnace for Your Home, Average Costs, Installation Basics, and More

Furnace Installation & Buying Guide: Types of Furnaces, How to Choose the Right Furnace for Your Home, Average Costs, Installation Basics, and More

(Last Updated On: June 28, 2017)

Your home’s furnace is essential to your family’s day-to-day comfort, and is a major investment in your property. It makes sense to thoroughly research available options before making any decisions around a furnace upgrade or furnace installation project. There are a number of factors to consider that can not only improve your home’s comfort, but may also help you save on your home energy costs.

Types of Furnaces

The two most common types of home heating systems include forced air and radiant (or boiler) systems. Forced air systems require ductwork to blow (or force) the heated air through in order to distribute heat to various rooms of your home. Radiant heating systems come in several different forms. They rely on boilers, which send heated water or steam through a series of pipes to radiators or baseboards, which give off heat wherever they are installed. Radiant heating systems may also transfer heat to a floor through hot water tubing installed beneath the flooring surface.

radiant heating

For the purpose of this article, we are discussing forced air furnaces and not boiler heating systems.

While there are eco-friendly furnace options available, including geothermal and solar panel systems, our focus is on the three most popular types of furnaces: electric, gas, and oil.


Electric furnaces are an excellent choice for areas that do not experience intense winter weather, and generally have the lowest initial upfront costs. Due to the costs of electricity they can be somewhat expensive to operate, but are considered to be fairly energy efficient — especially in areas where the temperature stays above freezing. Other benefits of electric furnaces are that they are typically small and easy to install, don’t require special venting or piping, are easy to maintain, and last for up to 15-20 years.


The most popular type of furnace, gas furnaces are an excellent choice for areas that experience harsh winter weather. They do come with a higher upfront cost than electric models, but this is generally offset by lower monthly operating costs as gas furnaces are highly efficient. Because of this, they are able to quickly heat your home. Unlike electric models, gas furnaces often come with additional costs including installing, replacing, and maintenance needs such as regularly cleaning ductwork, annual inspections of the main unit, and replacement filters. A gas furnace can sometimes be converted for use with propane at a cost of around $20-$100 for the conversion kit.

Oil old heating installation

Oil furnaces are not as popular as they once were due to rising oil prices, but they are still available and are a good choice for areas that experience harsh winter weather. Oil furnaces do require a fuel storage tank, which is an additional cost and space consideration for their use. However, monthly operating costs are eliminated as you’re only paying for oil when the storage tank is filled — which could be on a quarterly, semi-annual, or even annual basis depending on the size of the tank.

Furnace Features: What to Look for When Purchasing a Furnace

Aside from energy source, there are several considerations that should be top of mind when it comes to selecting the best furnace for your home’s needs.

BTU Capacity

First, you’ll want to ensure the unit has the heating capacity necessary for your home. Plan for approximately 30-60 BTUs for every square foot of living space. (You can determine how many BTUs you’ll need to heat your home using helpful calculators such as this one.) This will be impacted by factors such as the age of your home and the climate zone in which you live. It is better to have a furnace that is larger than your needs, than to have a unit that is too small and cannot provide adequate heating for your home. Depending on climate, a 2,500 square foot home could require a furnace with 75,000-150,000 BTUs. Just because a furnace has a BTU rating of 100,000 doesn’t necessarily mean it will be able to heat your home — you’ll also need to consider its AFUE rating.

AFUE Rating

A furnace’s annual fuel utilization efficiency, or AFUE rating is the next major consideration when choosing a furnace. The AFUE measures how energy efficient a furnace is at converting its fuel source into heat over the course of a typical year. This allows homeowners to easily compare different furnace models and fuel sources.

For example, a furnace with an AFUE of 80% turns 80% of the energy in its fuel to heat, with 20% being lost through the chimney and elsewhere. This means that if a furnace has a 100,000 BTU capacity, with an AFUE rating of 80%, it really only has a maximum output of 80,000 BTUs. This is clearly an important factor to know when making your decision to purchase a new furnace. Shopping for a model that is Energy Star rated will ensure you’re getting a high-efficiency system, and is worth the investment for those living in climates that experience severe winter weather.

It is important to note that the AFUE rating of a furnace does not account for heat losses of the duct system or piping. This can account for up to 35% of the furnace’s energy output, especially for ducts located in poorly-insulated spaces such as the garage or attic.

Load Calculationthermostat

The best way to find a furnace suitable for your needs is to perform what’s called a load calculation. (You can find a handy calculator to help you figure out this metric here.) This takes into consideration a number of factors including house size, location, foundation type, window type and location, and many other things that influence home heating needs. The best person to perform a load calculation for your home is a qualified heating, ventilation, and air conditioning (HVAC) professional. Not only will a load calculation ensure that your home heating system is adequate to properly heat your entire house, but it can also save you money, because you’ll be less likely to purchase an oversized system for your needs.


A major perk of installing a new furnace is that it will come with a warranty, which ensures that most repairs or defects will be covered. Depending on the manufacturer, warranties can range from 5-10 years in length and as a general rule are better on premium brands. You may also be able to purchase an extended warranty for an additional fee.

Finally, you’ll need to decide on an appropriate installation spot, ensuring there is adequate space for the ventilation requirements and drainage of the condensing tube of the unit. You may need to upgrade this, depending on your home’s age. You should also work to increase your home’s energy efficiency by sealing air leaks such as foundation cracks, leaky windows, or replacing door sweeps in order to prevent heat loss.

There are a few other features that are not essential to choosing the best furnace, but certainly contribute to overall ease of use and comfort. They include:

  • Air filtration: An integrated filtration system can help cut down on the dust circulated through the system.
  • Ignition system: Increases efficiency by eliminating a continuous-burning pilot light.
  • Variable heat output: This feature increases comfort and efficiency and is available on units with variable-speed blowers.
  • Variable-speed blower: Helps prevent swings in temperature by delivering air in a more controlled, slower, and quieter manner.
  • Dual heat exchanger: Helps ensure maximum efficiency by drawing heat from burned gas.
  • Zoned heating: Allows you to heat specific areas of your home, so you’re only using energy where you need it.

Average Furnace Costs: How Much Should You Expect to Pay?

Surveys show that most American homeowners spend approximately $2,300-$5,575 when replacing their furnace, with the national average cost of furnace replacement at roughly $4,000. Costs will vary depending on a number of factors including location, local climate, type of unit, brand of unit, experience of installer, size of your home, whether or not any duct work needs to be carried out, and fuel source. If major electrical or duct work needs to be carried out, that will add significantly to the overall cost of replacing a furnace.

home heating costs

Depending on where you live, you may be required to obtain a permit prior to having your furnace installed. This can cost as little as $50 and can run into the hundreds of dollars. You may also need to have an inspection completed by your city or municipality, depending on local bylaws.

When it comes to purchasing a new furnace for your home, less is not always best. You may be tempted to purchase the least expensive model available, but given the major role your furnace will play in your family’s day-to-day life, it’s worth making the additional investment. The same goes for choosing a furnace installer. It may be tempting to save a few bucks by hiring the company that provides the lowest quote, but you want to ensure the installer you choose has the right level of experience, expertise, and can provide the quality service necessary for your furnace for years to come.

Furnace Installation: Step-by-Step

Furnace installation is a complicated endeavor, and is not something that should be attempted as a do-it-yourself project. It might be tempting to save on the installation fee, but furnaces contain several complicated components including electrical, ducting, plumbing, and gas, that require the installation expertise and specialized tools of a qualified HVAC professional.

That said, it’s good to understand the process of how a furnace is installed. Here’s a step-by-step breakdown of how to install a furnace. We’ve used a forced-air, gas furnace for our example as it is a popular choice among homeowners.

Step 1: Choose your furnace and select the location for installation. Once you have chosen your furnace, you’ll need to select a suitable location for it. This will be influenced by a number of factors including the type of furnace you have chosen, and your plans for the remainder of the space. All furnaces will have specifications for installation included with the unit, so you’ll be able to easily see how much clearance and ventilation is required. Ensure the area is cleaned of any dust or debris before you begin. If your furnace is being installed in a basement, you’ll want to ensure that it is placed upon blocks at least 4 inches above ground in order to protect against flooding. If your furnace did not come with rubber isolation pads, you’ll want to purchase some as these will help to cut down on noise when the furnace is running. Unpackage your new furnace, removing all loose parts and instructions.

Step 2: Decide where your duct and drain will run. The return air duct can be on the side or bottom of the unit, and requires a hole be cut into the unit. Most come pre-marked with the appropriate size opening needed. Next, decide which side the condensate drain will run. Place your furnace into position, nearly level with a slight slope towards the condense drain exit.

Step 3: Connect to the ducting system. Once your main furnace unit is adequately positioned, you can begin connecting it to your home’s ducting system. Ensure you’ve sealed any connection with a metal foil tape or a duct sealant — do NOT use duct tape for this step as it will not last.

Step 4: Connect vent pipes. Next, connect your furnace’s intake and exhaust pipes — again, on a slight angle sloping towards the unit so that any condensation can effectively and safely drain.

Step 5: Connect gas supply. Ensure adequate shutoff and ventilation, and when complete be sure to check for leaks.

Step 6: Connect electrical supply. There are generally two connections on a furnace, a low and line voltage. Be especially mindful of the polarity during this step. Before starting your new furnace for the first time, verify your wiring with the instruction manual.

Step 7: Connect condensate drain. This is usually via a hose to a drain hole in your basement’s floor.

Step 8: Check your work. The final step in furnace installation requires turning the unit on and running through a heating cycle to ensure temperature outputs are where they should be according to the manufacturer. Give yourself about an hour’s worth of runtime to check this. You should also double check for any gas leaks, and to ensure the condensate drain is draining properly.

Again, it should be reiterated that furnace installation is a complicated undertaking with many complex steps that should only be attempted by qualified HVAC professionals. The steps listed above are merely to give homeowners an idea of what’s involved in the process of installing a furnace.

Options for Furnace Repair

Some tasks, such as replacing your furnace’s air filter or identifying an empty fuel oil tank, can safely be performed by any weekend DIY-er, but it’s best to leave major repairs to your trusted home heating professional. Don’t forget to schedule yearly maintenance on your furnace to ensure everything is working properly. Doing so can not only save you money on your monthly heating costs, but can help to prolong the life of your furnace for many years to come.

Additional Reading on Furnaces

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