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A Visual Cost Comparison of Heating Options for Your Home

Hannah Voit

Published on January 9, 2023


A Visual Cost Comparison of Heating Options for Your Home

We visually compare and break down the costs of five of the most popular heating systems and help you decide which is the right option for your home.

Heating systems are vital, especially for homes in colder climates. However, choosing the correct system for your home is probably more complex than you may think. While the purchase price is often one of the main factors to consider when making any big purchase, with heating, running costs and energy losses can create significant long-term expenses. 

Considering that heating accounts for about 29% of your utility bill, it makes sense that choosing the most efficient system should be a priority. We compare different types of heat pumps, gas boilers, gas furnaces, electric furnaces, and electric boilers to help provide a balanced view of which option will be best for you.

What the Costs Look Like From the Start Line

The above graphic was created using a combination of Fixr.com’s cost guides and information from the U.S. Energy Information Administration and the Census Bureau. Average costs were used for a 2,000-2,500 sq.ft. home and they can vary slightly depending on your region. As most systems require specific skills for installation, the installation cost is often quite high, as you can see in the graphic, and should be considered in conjunction with the purchase cost, when comparing overall prices.

In total, an air source heat pump is the most costly to buy and install at $10,025, with installation costs making up the larger part of the costs, as installation is difficult and time consuming. This might explain why they are a lot more common in the U.S. than their geothermal counterpart. The next most expensive is a gas boiler, but it’s more than 70% cheaper than a geothermal heat pump in total, coming in at $6,325, closely followed by a gas furnace at $5,875. The electric boiler is the second to cheapest option at $4,875, while the electric furnace is the cheapest option at $2,825.

Air source heat pumps not only have the highest installation costs, they also have the highest system cost at $5,000. Electric boilers have the lowest installation cost at only $1,100, however, electric furnaces come in with the lowest purchase price of $1,100.

Removal and disposal costs were also considered; if you are considering a new heating system, chances are you have to first remove your existing one. If the same company that installs your new system removes and disposes of the old one, they usually include this in your installation costs. However, if you use a third party to remove and dispose of the unit, expect costs of around $200 on average. HVAC permits can vary in cost by state, but typically average around $325 where required. 

Costs to Be Considered Down the Line

As mentioned, the running costs of heating systems can be significant so apart from purchase costs it can be helpful to assess the various options in that regard. One way to judge efficiency is by calculating the Annual Fuel Utilization Efficiency (AFUE) rating, which measures the efficiency of the system when converting energy from its fuel to heat, taking exhaust/losses into account. The higher the AFUE rating, the more energy efficient the system is. Should the specific system you choose have a rating of 90, it stands for 90% of its fuel being turned into heat for your home. Another factor to consider is the cost of the fuel itself, which varies according to location. Keep in mind that not all areas have access to natural gas; most gas boilers and furnaces will also run on propane, but this has significantly higher costs than gas, and that while air source heat pumps take their heat from the air, they do use a small amount of electricity to move that heat indoors.

While most systems do use the AFUE to determine their efficiency, heat pumps are so efficient that they can reach efficiencies of 200% to 400%. They are therefore measured differently, with what is known as a coefficient of performance (COP). For every one unit of energy the unit uses, it produces 2 to 4 times that amount. The higher the COP, the better the unit will perform.

Air Source Heat Pump (electric) Gas Boiler Weatherized Gas Furnace Electric Furnace Electric Boiler


Energy efficiency

2-4 COP 82-96 AUFE 81-95 AUFE 100 AUFE 100 AUFE
Estimated winter heating costs 22/23 $596 $950  $950  $1750 $1750

While the electric furnace and boiler came up most cost-effective in the initial cost comparison, they don’t fare so well when it comes to running costs. While according to the U.S. Department of Energy, the AFUE for an electric furnace or boiler is as high as 100, the cost of the electricity is often prohibitive and nearly three times that of gas. In order to heat an average sized home all winter, you would need to pay as much as $1,750 in total electricity costs if you relied solely on an electric furnace or boiler. This is why electric furnaces and boilers are typically only used in mild climates that only need occasional heat, or if you only want to heat a small, specific space.

The gas furnace and boiler are more cost-effective over time, more so than electricity, as gas is usually a lot cheaper than electricity. This probably relates to the fact that almost 50% of homes primarily use gas for their heating systems. To heat a 2,000 sq.ft. home with natural gas, using a system with about 90 AFUE, it will run approximately $950 over the winter. While Gas systems can be less efficient than electric options, with AFUEs ranging from 81-96, their green rating is better as gas produces significantly less CO₂ than coal, which is traditionally burnt to produce electricity.

Of course, the cleanest option by far, and most cost-effective to run is a heat pump. This system doesn’t burn fuel but rather works by extracting heat from the air or the ground (geothermal). Despite a small amount of electricity needed to run the system, it is the most eco-friendly option on the list. Though installation and system costs can be prohibitive, if you have the budget, this system provides the most consistent temperatures in-home, for the least energy input. Also, thanks to the federal Inflation Reduction Act, installing a heat pump between 2022 and 2032 comes with a substantial financial incentive of 30% of installation costs. While it uses electricity, it only costs $596 to heat your home all winter, even in a cold climate, compared to the very high cost of heating with an electric furnace or boiler.

How to Decide Which Heating System Is Right for Your Home

As you can see, the initial costs and running costs are almost inversely related. There are many factors that will affect the real costs to an individual household, including local climate, local energy tariffs, availability of energy in your area, space and existing fittings, as well as budget. For example, solar or wind-generated electricity may be available, making electrical options the most cost-effective and eco-friendly options.

Speak to your local energy providers

To start with, consult your municipality and local energy providers to see what incentives and offers they may have for all energy sources. 

Make your home more energy efficient

Before you invest in any heating system, ensure you adequately seal and prepare your home, to ensure that whatever heat you do generate can’t leave the house easily. This includes sealing all ducts and exits sufficiently, installing window drapes/shades made from insulating materials (keep them open to allow sun in during the day but closed in the evening), insulate your attic, and invest in a programmable thermostat. The average cost to insulate your home is $4,500. 

Look at initial costs, running costs, and eco rating

Finally, establish what your priorities are regarding initial cost compared to running cost, and eco rating. This should leave you with a pretty clear idea of which is most available to you and should serve you well as we head into the cold season.