How much does it cost to install an oil furnace?

Reviewed by Adam Graham remodeling expert. Written by Fixr.com.

Oil is one of the most readily available heating sources in the U.S. Even in areas where natural gas or propane are used less, oil is still a viable option, offering better and more consistent heating than electricity, particularly in cold climates.

Oil furnaces come in many sizes with a number of efficiency options, creating a range of costs for installation. The average cost range for an oil furnace replacement is between $5,000 and $9,000, with most people paying around $6,000 for a 90% AFUE oil furnace installed in a 2,000sq.ft. home with a new oil line and tank. This project’s low cost is $3,500 for a direct replacement of a standard furnace with minimal adjustments. The high cost is $11,000 for a new high-efficiency furnace with a tank, oil line, vent, drain, and cleaned and sealed ducts.

Cost of New Oil Furnace

What Is an Oil Furnace?

An oil furnace heats your home using oil and a forced hot air heating system. The furnace burns oil to produce heat. This heat warms the air, which is forced through a series of ducts in your home, where it expels into the various rooms via vents. Oil furnaces require an oil storage tank on your property, and you need oil delivered to the tank by an oil provider. They generally provide a storage tank and external connection for the oil to enter your home.

You should use an oil unit if you live in an area without access to natural gas or liquid propane and you do not want to use electricity.

Oil Furnace Prices by Type

Depending on where you install your new furnace, you need one of two basic types. Upflow furnaces are vertical units installed in the basement or lower level. Downflow furnaces are horizontal and usually installed in attics and crawl spaces. Your home’s setup dictates which type you should use. Depending on where you purchase them, there is a slight variation in costs between the two, but they are not very different in installation and cost.

Upflow Oil Furnace

The price of an upflow oil furnace is $1,700 to $5,000. Upflow furnaces sit in your basement or lowest level. They are designed to push hot air up through the vents to the rest of your home. They are typically cabinet-style and vertical. You may find some that are shorter than others, depending on your unit and its size. This can be beneficial if you fit the furnace into a smaller area or utility closet.

Downflow Oil Furnace

The price of a downflow oil furnace averages $1,800 to $5,000. Downflow units sit in your attic or crawl space at the top level. They are designed for the air to flow down through your home. The unit is generally installed horizontally to fit into tight spaces with low roofs, such as the eaves of a crawl space. They can also be installed vertically. For homes without basements or retrofitting a space, these may give you more placement options than upflow cabinets.

What Size Oil Furnace Do I Need?

To get a general idea of the furnace size you need, consider your home size and climate zone. Consult the U.S. Energy Information Administration’s climate zone map to determine your zone number. The age and quality of your ductwork as well as the amount of insulation in your home further determine the exact size required.

Climate zones range from 1 - 5, with one being the hottest parts of the country like Florida and 5 being the coldest parts like Minnesota. Each zone has a base number of BTUs or British Thermal Units that you need to heat a square foot.

To determine the size of furnace you need, calculate your home’s square footage, and then multiply it by the range in your zone. Measure the length and depth of each heated room in your home and multiply these together to get your square footage. Add up all the rooms to get your total square footage.

Stay within 10% to 20% of the number of BTUs you determine in this calculation. If you are between two sizes, round up to the next nearest, but try not to go over 20% because this yields a furnace that is too large for your home.

Keep in mind that electric furnaces are only recommended for zones 1 and 2 and partial use in zone 3, but other furnaces are used in all zones. Make your decision based on the availability of the fuel you choose.

Below is a list of the average BTUs needed for homes located in zone 4 based on size.

High-efficiency Oil Furnace Prices

Oil furnaces are typically not very efficient. They use less fuel than other furnace types, but most do not achieve an efficiency greater than 90%, with most being in the low to mid-80s. A few high-end brands have an efficiency of 95% or higher by using a condenser. This means the furnace condenses the exhaust before venting. This extracts extra heat from the exhaust to be more efficient. These are more expensive, having starting costs for the furnace itself at around $3,500 to $5,000. You pay more for the installation as well because a drain needs to be installed. However, you save money each month on the cost of oil because the furnace uses less. High-efficiency furnaces are mostly recommended for very cold climates. Homes in moderate climates may do better with a standard-efficiency unit.

New Oil Furnace Cost by Brand

Oil burner furnace prices vary depending on the brand. Standard brands tend to cost less and are rated for 15 - 18 years, while premium brands last up to 25 years, have better energy efficiency, and cost more. The following are some of the common brands frequently installed in homes. They range from economic to luxury, and most brands have several options for type, size, and efficiency. The following costs are for the units without installation, new tanks, or oil lines.

Carrier Oil Furnace

The price of a Carrier oil furnace is $1,500 to $2,500 on average. Carrier is produced by the same company that makes the Bryant brand name. You may see some labeled as Carrier/Bryant by sellers. These are good budget furnaces that are compatible with other brands for central air systems. They have 7 models between the two brand names. All have an efficiency above 80%.

Trane Oil Furnace

The price of Trane oil units ranges from $1,700 to $2,500. They are considered a good-quality budget brand and have a much more limited selection of oil furnaces than other systems. You are limited in size and style if you choose Trane. The models they produce have variable-speed blowers, making them more efficient than other budget brands.

Comfort-Aire

The price of a Comfort-Aire oil unit averages $1,850 to $3,000. Comfort-Aire makes a wide range of HVAC systems. However, they do not make a wide range of oil furnaces. This means you are limited in size and efficiency. Their oil units are around 83% efficient. They are compatible with Comfort-Aire central air conditioners and third-party thermostats.

Thermoflo

The price of a Thermoflo oil unit is $1,900 to $3,500. Thermoflo is a division of Williamson, a manufacturer of HVAC equipment. Many of their models may be sold under the name Williamson-Thermoflo. They primarily make oil-fired boilers but have a small range of oil-fired furnaces. These are available in a limited range of sizes. They are compatible with other Williamson-Thermoflo equipment and third-party thermostats.

Olsen Oil Furnace

The price of Olsen oil furnaces is between $2,000 and $4,000. Olsen has been manufacturing oil furnaces for decades. They have a wide range of sizes and efficiencies available. Their most efficient model is rated up to 87.5% efficiency, which is higher than many other brands. They have many more options than other companies, including furnaces that come in several configurations. This allows them to fit into more spaces and homes.

Miller

The price of Miller oil unit averages $2,200 to $4,100. Miller has been making furnaces that can run on oil for more than 50 years. Some of their furnaces are designed to switch between fuels, including oil, natural gas, and liquid propane. This can benefit homeowners who may want to switch fuels without investing in an entirely new system. Their furnaces are roughly 83% efficient when designed for oil-burning only. Their mixed fuel systems have an efficiency of roughly 74%.

Rheem Oil Furnace

The price of a Rheem oil unit ranges from $2,200 to $4,200. Rheem oil units come in a few models, including different sizes and efficiencies. Their units range from 85.9% to 86.5% efficiency. Their units are compatible with Rheem central air conditioners. Rheem is considered a reliable mid-grade oil furnace.

Thermo Pride

The price of a Thermo Pride oil furnace is $2,400 to $4,400. Thermo Pride makes a full range of oil furnaces. This includes models of varying sizes and configurations and units for mobile homes. They have units that work with height restrictions and units that can position horizontally and vertically, depending on the space’s needs. Their efficiency ratings are around 85% to 86% on most models. Thermo Pride oil furnaces are compatible with their other HVAC systems.

Armstrong Oil Furnace

The price of Armstrong oil unit is $3,000 to $5,500. Armstrong makes 6 different lines of oil furnaces. This includes models with different efficiency ratings, sizes, and configurations. They have a line of high-efficiency furnaces, which are geared toward homeowners in northern climates. Even their standard models have efficiencies of over 83%. Many of their top energy-efficient models minimize heat loss, saving money.

Adams Oil Furnace

The price of an Adams oil furnace ranges from $3,100 to $5,000. Adams units are some of the most efficient on the market. They can reach efficiencies of 95% with condensing technology. Condensing technology means the exhaust is condensed to extract heat before it is vented. This means more heat can be produced per unit of oil burned, resulting in more efficiency and lower oil costs. Adams makes a range of oil furnaces, which can fit into many spaces and homes.

Kerr Oil Furnace

The price of Kerr oil furnaces averages $3,250 to $5,500. Kerr is a manufacturer of high-efficiency condensing oil furnaces. Their furnaces extract heat from the exhaust before it is vented. This means that while their furnaces are more costly, they use less oil, resulting in lower ongoing costs. This is a good furnace for homeowners who live in very cold climates. They can achieve efficiencies of up to 95.8% on many models.

Oil Furnace Replacement Costs

​​The initial costs of installing a new oil furnace involve the set up with the tank and oil pipe and installing the vents and drains. Replacements may be less expensive because you do not necessarily have to purchase a new tank or install an oil line. However, older furnaces produce a lot of soot, meaning replacements have high labor costs of $1,000 to $1,500 to clean out the vents and ducts to install the furnace properly.

There is a lot of cleaning that happens when replacing an oil furnace, so you may find that your total costs work out to be about the same as the cost of a new furnace installation. Labor may cost $3,000 to $3,500, but you have roughly $1,000 to $1,500 in savings if you can reuse the same tank and oil line. This means replacements have an average total cost range of $5,000 to $9,000 like new installations, including the labor and furnace.

Signs that your oil furnace needs replacing include a lack of hot air when the blower is on, using a higher than average amount of oil, rust on the furnace, or noise coming from the furnace. Due to the high cost of oil, if your furnace is more than 10 years old, consider a more efficient replacement to lower your monthly heating costs.

Labor Costs to Install a New Oil Furnace

Many components go into installing an oil furnace, which impacts the total cost. If this is a new furnace installation, the technician needs to install the furnace, create a vent, install an oil line, and install the oil tank. The labor portion is around $1,800 to $3,000 to install the furnace and vent. Costs for labor climb as high as $2,800 to $4,800 if you install a new oil tank and line. The average installation also has additional parts for the tank and line, ranging from $1,000 to $1,500. Everything totals $5,000 to $9,000 for most installations, including the furnace for an average installation.

Cost to Convert to Oil Heat

Oil is a good heating fuel for very cold climates. It can heat a home well, often with less fuel than may be needed for a propane furnace and lower costs than heating with an electric furnace. Oil is stored in a tank on your property like propane. For this reason, conversion to oil requires purchasing and installing a tank, oil line, and furnace. The prices below show the cost of converting to oil from your current system.

Average Cost to Convert an Electric Furnace to Oil

The cost to convert an existing electric furnace to an oil furnace is $3,000 to $6,000. This cost includes the new oil tank, line, furnace, and installation. Electric furnaces are smaller than those in very cold climates. While oil is uncommon in moderate climates, it can be found in some areas. Switching to oil may lower your energy bills while providing more consistent heat. Electric furnaces are easy to remove, making the new installation straightforward.

Convert a Propane Furnace to Oil

The cost to convert a propane furnace to an oil furnace ranges from $5,000 to $11,000. Propane and oil units are very similar. Both are frequently used in cold climates where natural gas is not available. Both are also stored on the property in tanks. To convert, you must remove the propane tanks and line and install a new oil tank and line. Because most propane users in cold climates can achieve efficiencies of 99%, it is common for those switching to oil to consider a condensing oil unit for higher efficiency. This has higher costs for the unit, but conversion is fairly simple because propane furnaces also require a drain.

How Much Does It Cost to Run an Oil Furnace?

Oil is one of the priciest heating materials available. It produces more BTUs per gallon than gas or propane, so you use less of it than other materials, but your overall costs are still higher. The average price to heat a home with oil in the U.S. is around $1,400 each winter, although costs vary depending on location, home size, and how efficient the furnace is.

Oil Furnace Cost per Month

The cost to run your oil furnace each month depends on several factors. This includes the cost of oil in your area, your furnace’s efficiency, your home size, and how many hours a day you run the furnace.

According to the EIA, the current cost of heating oil averages $2.88 a gallon nationally. Assuming you heat your home for 4 months a year, this translates to a monthly cost of between $200 and $800 a month for homes averaging 2,500 sq.ft.

Oil Furnace Cleaning Cost

Oil units tend to be higher in maintenance than other types. They produce a lot of soot, which needs to be properly vented and cleaned from the furnace regularly. Change the filters periodically and have your ductwork cleaned because the soot builds up inside the ducts, lowering their efficiency over time. Expect to service your furnace yearly at a cost of around $200, change your filters every 1 - 3 months, and clean your ducts every 3 - 4 years to keep your system running optimally.

Converting an Oil Furnace to an Electric Heat Pump Cost

If you live in zones 1 or 2, you may not use your oil furnace enough to make it worth replacing it and dealing with the high cost of oil. In this case, you may want to convert to an electric heat pump instead. Electric heat pumps are not efficient at heating homes in colder climates but work well in warmer areas.

Heat pumps have a wide range of costs because they are made for single rooms or entire houses. The most common type is air-to-air, which uses the heat in the outside air to warm your home, even on cooler days. The cost to convert to a heat pump is around $2,000 to $8,000, depending on the size and style of the system.

Mobile Home Oil Furnace Prices

Mobile homes are generally smaller than stick-built properties and use significantly less oil and a much smaller furnace to heat. Expect the average mobile home oil furnace to have starting costs of around $1,500. Keep in mind that not as many brands produce oil units for this use, and you may find more options with natural gas, propane, or electric furnaces.

Propane vs Oil Furnace

Oil is commonly used in areas where natural gas is unavailable. Many of those areas have access to propane, which is delivered and stored at the house like heating oil. Propane is less expensive to use than oil, costing around $1,100 each winter, and the cost to install a new furnace is also less costly, approximately $4,000 for a high-efficiency furnace.

Propane furnaces operate in much the same way as an oil units. They are cleaner and require less maintenance, however, because they do not produce the same amount of soot. Many gas furnaces can also be converted to propane and from propane to gas. This means you have more options with propane furnaces in size and efficiency than oil. Propane is difficult to get in some regions, so oil can often be a better choice for heating your home. While oil is more costly, many furnaces use less of it, meaning you need to fill up less frequently, depending on your tank size. Below are the costs of installing a new propane furnace versus installing a new oil furnace. These assume the average ranges of a high-efficiency unit for each.

Oil Furnace vs Gas Furnace

Another alternative to oil units are gas furnaces. While oil is traditionally used in areas where gas lines do not run, there are times when you may have a choice between the two types. Gas furnaces cost about the same, approximately $6,000 for a high-efficiency unit. The real benefit of using a gas furnace is the lower cost of heating your home. Heating with gas costs around $540 a year, as opposed to the $1,900 to $7,000 a year that it costs to heat with oil.

Gas furnaces are generally cleaner and do not require as much maintenance. While the cost is lower, you use more gas to heat your home than oil because oil burns hotter and produces more BTUs. Arguably, this makes oil furnaces slightly better for the environment as they use less natural resources to run. Below are the average costs for a new gas furnace and a new oil furnace, both with high efficiency and fully installed.

Heat Pump vs Oil Furnace

If you live in a moderate climate, another solution you may consider to heat your home is a heat pump. Heat pumps do not heat air like a furnace does. Instead, they move heat from one location to another. Air source heat pumps move heat from the air outdoors into your home. They run in reverse in the summer, moving the heat from your home to the outdoors. Geothermal heat pumps work the same way but use the ground to take and distribute heat rather than the air. There can be a very wide range of costs, depending on the system type.

Air source heat pumps run on electricity. While the cost of electricity is more than oil, heat pumps are much more efficient. They also cost considerably less to run without producing much soot.

However, oil furnaces can often function in a power outage. During an outage, a heat pump ceases to function. Oil units can also be very efficient at heating large homes in very cold climates. Heat pumps are more suited to providing supplementary heat to cold climates or for heating moderate climates. They may also occasionally provide heat to warm climates, while acting as a supplementary cooling system.

Heat pumps do not require ducts to work, while oil furnaces do. Installing ducts can dramatically raise the project’s cost of an oil unit, making a heat pump more cost-effective. Below are the costs of a new oil furnace and a new heat pump, fully installed. The costs of the furnace do not include the costs of new ducts.

Enhancement and Improvement Costs

Variable-Speed Blower

Having a variable-speed blower on your furnace increases its efficiency by adjusting to your needs. Variable-speed blowers change the rate at which the air is pushed through your ducts. This can save you money by slowing down when not as much heat is needed. These furnaces start at about $5,000.

Removal or Disposal of Old Furnace

Many companies remove and dispose of your old furnace at no additional cost. Others charge a fee between $50 and $200 for this service, so ask if it is included.

HEPA Air Filter or Humidifier

Installing a new furnace is a great time to add a whole-house HEPA filter or humidifier to clean and condition the air in your home. These cost around $600 - $1,000, depending on the type. However, they are not normally recommended because they often do not perform as well on furnaces as they do as stand-alone appliances.

Add Insulation to Your Home

Adding insulation to your home reduces the amount of fuel needed to run your furnace. This lowers the furnace size you need and your monthly energy bills. The average cost to insulate a home is between $3,000 and $7,000. For energy-efficiency purposes, a house must have proper insulation from the roof down to the foundation.

Additional Considerations and Costs

• Tax credit. If you purchase a high-efficiency furnace, you may be eligible for a tax credit, depending on its efficiency and your home’s age. These amounts change each year, so check with your HVAC technician or accountant for more information.
• Permit. Depending on where you live, you may need to have a permit and inspection for replacing or installing a furnace or working on your HVAC system. Speak to your HVAC technician for more information.
• Maintenance. Have your technician perform any necessary maintenance before you replace a furnace. Sometimes, only inexpensive repairs are necessary to keep the unit running.
• Sealing air ducts. Replacing your furnace is also a good time to have your air ducts sealed to improve the furnace’s efficiency. This extends your furnace’s life and saves money on your energy bills each month.
• Expense. Heating a home with oil and maintaining an oil unit is more expensive than using other furnaces. It is roughly three times as costly to run an oil unit over a gas furnace, so if gas is available in your area, you may want to switch.