A new furnace installation costs $3,500 to $8,500 for gas (national average: $5,500), $2,000 to $5,500 for electric (average: $3,500), and $5,000 to $10,000 for oil (average: $7,200) in 2026. The biggest cost drivers are the efficiency rating (80% AFUE vs. 96%+ AFUE adds $1,500–$3,000), brand choice (budget vs. premium adds $1,000–$2,500), and regional labor rates (which vary by 30–50% across the country).
Here's a complete breakdown of every cost component so you know exactly what you're paying for — and where you might be able to save.
Total Installation Cost Overview
Cost Breakdown by Component
Equipment Costs by Brand and Tier
Labor Costs by Region
HVAC labor rates vary significantly by location. Union vs. non-union markets, cost of living, and seasonal demand all affect pricing.
Hidden Costs and Add-Ons
These are the costs that often surprise homeowners when they get the final invoice:
Ductwork modifications ($500–$3,000+): If your new furnace is a different size than the old one, or if existing ducts are undersized, damaged, or leaking, ductwork modifications may be necessary. A thorough contractor will inspect your ductwork and flag any issues in the quote.
Venting conversion ($300–$800): Upgrading from an 80% AFUE (non-condensing) furnace to a 90%+ AFUE (condensing) furnace requires replacing the metal flue pipe with PVC venting and adding a condensate drain line. This is a standard part of a high-efficiency upgrade but is sometimes quoted as a separate line item.
Electrical upgrades ($200–$800): Some new furnaces require a dedicated electrical circuit, especially high-end units with variable-speed blower motors that draw more current. If your existing wiring is undersized, an electrician may be needed.
Gas line sizing ($200–$1,000): A larger furnace or one with a higher BTU input may require a larger-diameter gas line. This is more common when upgrading from an older, smaller unit.
Asbestos abatement ($500–$3,000): Homes built before 1980 may have asbestos-containing materials in the existing ductwork, insulation, or flue pipe. Removal requires a licensed abatement contractor — this can add significant cost.
Code compliance upgrades ($200–$1,500): If your home's HVAC installation doesn't meet current building codes, the contractor or inspector may require upgrades — such as adding a combustion air supply, installing a CO detector hardwired to the system, or upgrading the flue per current standards.
Watch for low-ball quotes that exclude these items. A quote that seems $1,000–$2,000 lower than competitors may not include permits, ductwork modifications, venting changes, or disposal of the old unit. Always ask: "What is NOT included in this price?" and get the answer in writing.
How to Get the Best Price
Get at least 3 quotes. This is the single most effective way to ensure a fair price. Prices for the same furnace and installation can vary by 30–50% between contractors in the same city.
Time your installation for the off-season. Late spring (April–May) and early fall (September–October) are the slowest periods for HVAC contractors. Many offer 10–15% discounts or promotional pricing during these months. Avoid emergency replacements in December and January when demand and prices peak.
Ask about manufacturer rebates. Carrier, Trane, Lennox, and other brands periodically offer $200–$1,000 rebates on qualifying equipment. These promotions are most common in spring and fall.
Check for utility rebates. Many gas and electric utilities offer rebates for high-efficiency furnaces. Typical rebate: $200–$500 for a 95%+ AFUE furnace. Check your utility's website or the DSIRE database (dsireusa.org).
Consider financing. Most HVAC companies offer financing through providers like GreenSky or Synchrony with promotional 0% APR for 12–36 months. If you can pay it off within the promotional period, this is essentially free money. Avoid financing that locks you into high interest rates after the promotional period ends.
Don't automatically choose the cheapest quote. The lowest bid may come from an unlicensed contractor, skip permits, or cut corners on ductwork and venting. Poor installation is the #1 cause of furnace inefficiency, comfort problems, and premature failure. Verify that every contractor is licensed, insured, and pulls permits.
What to Expect on Installation Day
A typical furnace replacement takes 4–8 hours from start to finish for a straightforward swap. Here's the process:
Before installation:
- Contractor performs final measurements and confirms equipment selection.
- You clear a path to the furnace area and move any stored items.
- Contractor pulls necessary permits (if not done during the quoting phase).
During installation (4–8 hours):
- Disconnect and remove old furnace (30–60 minutes).
- Inspect and modify ductwork connections as needed (30–90 minutes).
- Set new furnace in place and connect ductwork (60–90 minutes).
- Connect gas line (gas furnace) or electrical (electric furnace) (30–60 minutes).
- Install or modify venting (30–90 minutes for condensing conversions).
- Install condensate drain/pump if needed (15–30 minutes).
- Connect thermostat wiring (15–30 minutes).
- System startup, combustion analysis, and testing (30–60 minutes).
After installation:
- The contractor walks you through the new system's operation, thermostat, and filter location.
- They should provide all warranty registration information and paperwork.
- A city or county inspector will schedule a follow-up inspection (usually within 1–2 weeks).
Insist on a combustion analysis at startup. A proper installation includes measuring gas pressure at the manifold, verifying the temperature rise across the heat exchanger, and performing a combustion analysis to ensure CO levels are within spec. This 15-minute test confirms the furnace is operating safely and efficiently. If your contractor doesn't do this automatically, ask for it.
Real-World Installation Examples
Example 1: Budget Installation in Columbus, OH The Millers replaced a 22-year-old 80% AFUE single-stage furnace with a Goodman GMSS92 (92% AFUE, single-stage). Equipment: $1,300. Labor: $1,600. PVC venting conversion: $450. Permit: $175. Thermostat (Honeywell T6 Pro): $120. Old unit disposal: $100. Total: $3,745. This was the lowest-cost option that achieved high-efficiency condensing operation.
Example 2: Mid-Range Installation in Denver, CO The Johnsons chose a Carrier Performance 59TP6 (96.5% AFUE, two-stage, variable-speed blower). Equipment: $2,400. Labor: $2,200. Venting: already PVC from previous condensing furnace. Minor ductwork adjustment: $350. Ecobee Smart Thermostat: $200. Permit: $225. Disposal: $100. Total: $5,475. The two-stage + variable-speed combination eliminated their comfort complaints about hot/cold swings.
Example 3: Premium Installation in Boston, MA The O'Briens selected a Lennox SLP98V (98.5% AFUE, modulating, variable-speed) with a Lennox iComfort S30 thermostat. Equipment: $4,200. Labor: $2,800. PVC venting (already in place): $0. Condensate pump replacement: $250. Smart thermostat: $350. Permit: $300. Disposal: $100. Total: $8,000. The modulating operation is whisper-quiet — important since their furnace is in a utility closet near the master bedroom.
Example 4: Complex Installation with Ductwork in Phoenix, AZ The Garcias converted from an electric furnace to a gas furnace, requiring a new gas line from the meter and ductwork modifications. Equipment (Rheem Classic Plus R96V): $1,800. Labor: $2,500. Gas line extension: $1,200. Ductwork modifications: $1,800. Venting: $400. Permit: $250. Thermostat: $150. Total: $8,100. The high cost was driven by the gas line and ductwork — the equipment itself was mid-range.
Key Takeaways
- National average installed cost: Gas furnace $5,500, electric furnace $3,500, oil furnace $7,200.
- The efficiency tier drives the biggest price difference. Going from 80% to 96%+ AFUE adds $1,500–$3,000 to the installed cost but can save $200–$400/year on fuel in cold climates.
- Get at least 3 quotes and compare them line by line. Verify each contractor is licensed and insured.
- Install in the off-season (April–May or September–October) for 10–15% savings.
- Watch for hidden costs: ductwork modifications, venting conversion, code upgrades, and asbestos abatement can add $500–$3,000+ to the base price.
- Don't let the cheapest quote win automatically. Installation quality affects efficiency, comfort, safety, and system lifespan for 15–25 years.
- Check for rebates: Manufacturer rebates ($200–$1,000), utility rebates ($200–$500), and the federal tax credit for high-efficiency equipment can significantly reduce your net cost.
- Insist on a combustion analysis at startup to confirm safe, efficient operation.
Frequently Asked Questions
Sources
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