All furnaces work the same at the base, but different fuel types power them. The three most common are electric, natural gas, and oil. The type of furnace you choose depends on how low the temperature dips in your region.
Electric Furnace
Electric furnace installation costs around $1,600 to $6,900. It’s less common than a gas heat system, and in fact, it’s technically a heat pump or geothermal system in milder parts of the U.S., where winters are relatively warm. An electric furnace moves air around a series of heated coils and then distributes the heated air throughout your home via ducts and vents. Units are sized according to how many kilowatts they consume. While electric furnaces are extremely efficient, they use a lot of electricity.
Natural Gas Furnace
Gas furnaces average $3,800 to $10,000 to install, but they can cost as much as $12,000. New gas models will save you money because they're more energy efficient, but be prepared to spend more on the front end. High-efficiency models cost 50% to 100% more than standard models.
According to the American Gas Association, these furnaces are most commonly used in areas with cold, harsh winters because natural gas heat tends to feel warmer than heat produced by alternative sources. For example, natural gas from a forced-air system ranges from 120 to 140 degrees Fahrenheit. Compare that to an electric heat pump, which delivers about 85 to 95 degrees Fahrenheit.
Oil Furnace
Oil furnaces have been around the longest and cost anywhere from $6,750 to $10,000 or more to install. They're widespread in the Northeast, where there's a lot of oil, but they're more expensive because oil is expensive to import and doesn't have good energy efficiency. There's also more maintenance involved because you need to regularly change the oil filter in your furnace.
They do have some benefits, though. Compared to gas furnaces, they don't leak carbon monoxide and don't run the risk of explosion. They also last the longest, about five to 10 years longer than gas furnaces.