;
An air-source heat pump costs $5,800–$10,000 installed, operates at COP 2.5–4.5, and lasts 15–20 years. A ground-source (geothermal) heat pump costs $18,000–$35,000 installed, operates at COP 3.5–5.0 year-round regardless of outdoor temperature, and lasts 20–25 years (with a ground loop lasting 50+ years). Both are far more efficient than gas furnaces, but they serve different homeowner needs.
The short answer: choose air-source if you want lower upfront cost and faster payback. Choose ground-source if you're building new, planning to stay 15+ years, want maximum efficiency, or live in a climate with extreme temperature swings.
Head-to-Head Comparison
Zone 4, 2,000 sq ft, $0.14/kWh electricity, $1.30/therm gas.
How Each System Works
Air-Source
An air-source heat pump exchanges heat between the indoor air and the outdoor air using a refrigerant cycle. The outdoor unit absorbs heat from outdoor air in winter (even cold air) and rejects heat to outdoor air in summer. Since outdoor air temperature varies from −15 °F to 115 °F+ depending on your location and season, the system's efficiency varies with conditions.
Ground-Source (Geothermal)
A ground-source heat pump exchanges heat with the earth instead of the air. Buried pipes (the "ground loop") circulate a water-antifreeze solution underground, where the temperature remains stable at 45–65 °F year-round (depending on latitude and depth). This stable temperature source is the geothermal system's key advantage — it doesn't matter if it's −20 °F or 105 °F outside; the ground loop provides a consistent, moderate-temperature heat exchange medium.
There are three main loop configurations. A horizontal loop uses trenches 4–6 feet deep across 400–600 linear feet per ton — requiring a large, flat yard. A vertical loop drills boreholes 150–200 feet deep per ton — works in smaller yards. An open loop pumps groundwater directly through the heat exchanger, requiring an adequate well and a discharge point (like a return well or pond).
Why Geothermal Is More Efficient: An air-source heat pump at 0 °F must extract heat from air that's 70 degrees colder than your indoor target. A geothermal system extracts heat from the ground at 50 °F — only 20 degrees colder. Less temperature difference means less compressor work, which means higher COP.
Efficiency Comparison by Temperature
The efficiency gap between air-source and ground-source grows as outdoor conditions become more extreme.
The ground-source system is most advantageous in extreme climates — both very cold winters and very hot summers. In mild climates (zone 3–4), the efficiency advantage exists but is smaller, making the payback period on the higher upfront cost longer.
Cost Comparison: Install + Operating + Lifetime
*25-year comparison assumes one air-source replacement at year 17 ($6,000–$8,000) but geothermal equipment still running. *30-year comparison assumes two air-source replacements but only one geothermal equipment replacement (ground loop still original).
Real-World Example — Boise, ID (Zone 5): The Chen family compared quotes for a 3-ton system. Air-source (Bosch IDS 2.0): $8,400 installed ($6,400 after 25C credit). Geothermal (ClimateMaster Tranquility): $26,000 installed ($18,200 after 25D credit). Annual operating cost difference: $350/year in favor of geothermal. Payback on the $11,800 upfront difference: 34 years. They chose air-source. Had they been building new (with geothermal loop costs 40% lower), payback would have been 18 years, and they might have chosen differently.
Installation Requirements
The biggest barrier to geothermal is the ground loop installation. Horizontal loops require 400–600 feet of trench per ton (1,200–1,800 feet for a 3-ton system) at 4–6 feet deep, which means tearing up a significant portion of your yard. Vertical loops require a drilling rig and boreholes 150–200 feet deep per ton. In both cases, the yard will need restoration after installation.
For new construction, loop installation is far less expensive because the excavation equipment is already on-site and the yard hasn't been landscaped yet. This is why geothermal is most commonly recommended for new builds.
Climate Performance
Lifespan and Maintenance
Geothermal systems win on longevity. The indoor heat pump equipment lasts 20–25 years, and the ground loop itself has a lifespan exceeding 50 years (some installed in the 1970s are still functioning). Air-source heat pumps last 15–20 years.
Geothermal maintenance is also simpler and cheaper. There's no outdoor unit to maintain, no defrost cycles, no outdoor coil to clean, and no exposure to weather or debris. Annual maintenance focuses on checking the circulating pump, verifying antifreeze concentration in the ground loop, and standard indoor coil/filter service. Typical cost: $50–$150 per year versus $80–$200 for air-source.
Tax Credits and Incentives
The uncapped 25D credit is a major financial advantage for geothermal. A $30,000 geothermal system receives a $9,000 credit, while a $10,000 air-source system is capped at $2,000. Combined with state incentives (many states offer additional geothermal rebates of $1,000–$5,000), the effective cost gap narrows substantially.
Key Takeaways
Air-source heat pumps cost $5,800–$10,000 installed; ground-source costs $18,000–$35,000. After tax credits, the gap narrows to roughly $3,800–$8,000 vs. $12,600–$24,500. Ground-source operates at COP 3.5–5.0 year-round, unaffected by outdoor temperature — a huge advantage in zones 5–7. Air-source with cold-climate technology closes much of the efficiency gap at moderate cost. Ground-source equipment lasts 20–25 years with a 50+ year ground loop, versus 15–20 years for air-source. For most existing homes, air-source offers better ROI (faster payback). For new construction, homes in extreme climates, or 15+ year stays, geothermal is the superior long-term investment.