Updated: January 12, 2026
Written by Dan Simms
Nieves is a home remodeling editor at Fixr.com with special interest in landscaping, pest control, painting, installation, and repair projects. She brings her work ethic, creativity, and love for teamwork into everything she does, including working with writers and designers at Fixr.com to develop useful and comprehensive guides for homeowners.
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Propane furnaces are popular among homeowners who don’t have access to natural gas but still want a more efficient and cleaner-burning fuel source than oil. They also put out more heat than electric furnaces and other electric heating systems, so they’re a good option for colder climates that need more heat production.
The average cost to install a propane furnace is $4,800, and most homeowners pay somewhere between $3,000 and $8,000. Your price will mostly be based on the size of the furnace you need for your home, the efficiency of the unit you install, and the local cost of labor in your area.
Cost of Propane Furnace
New Propane Furnace Cost Factors
There are many different factors that can influence your pricing, including the size and efficiency of the furnace you need, local labor costs, and more.
Cost by Furnace Output (BTU) and Home Size
The size of the furnace you need will very likely be the most important cost factor to consider, as larger furnaces can cost thousands of dollars more in material costs and also drive labor costs for installation higher.
Furnace output is measured in British Thermal Units (BTUs). You can use the table below to get an idea of what your project will cost if you have an idea of what size furnace you need, but it’s always best to have a professional perform a Manual J calculation to ensure your furnace can meet your demands based on your home size, insulation quality, climate, and more.
Home Size (Sq. Ft.) | Furnace Size (BTUs) | Average Cost |
1,000 | 30,000 – 60,000 | $2,000 – $4,500 |
1,500 | 45,000 – 90,000 | $2,500 – $5,500 |
2,000 | 60,000 – 120,000 | $3,500 – $7,500 |
2,500 | 75,000 – 150,000 | $4,000 – $8,500 |
3,000 | 90,000 – $180,000 | $4,500 – $9,500 |
Cost by Efficiency (AFUE)
Propane furnaces can come with a variety of efficiency ratings, and the rating you choose can affect your material costs, but also your long-term operating costs. Generally speaking, higher-efficiency units will drive your upfront costs higher but will reduce your long-term costs.
Furnace efficiency is expressed as the annual fuel utilization efficiency (AFUE), which tells you how much fuel your unit needs to produce a specific amount of heat. Propane furnaces are more efficient than oil furnaces, in general, so standard efficiency ratings range from 80% to 89% AFUE, and high-efficiency units have an AFUE rating of 90% or higher.
AFUE Rating | Propane Furnace Replacement Cost |
80–90% | $2,000 – $6,000 |
90%+ | $3,000 – $8,000 |
Cost by Furnace Type
The type of furnace you choose can also affect your installation costs. Single-stage furnaces, which are the least efficient and are either running or off, cost the least, while two-stage furnaces cost a bit more but can operate at two speeds to control heat production and efficiency. Multi-stage or modulating furnaces can operate at a variety of speeds to provide heat at varying levels for maximum efficiency. More stages mean higher material costs but lower operating costs over time.
Furnace Type | Typical Cost Range |
Single-stage | $2,000–$4,600 |
Two-stage | $3,500 – $6,500 |
Multi-stage | $4,500 – $9,000 |
Labor Costs
On average, you can expect labor to total between $1,000 and $3,100 to install your propane furnace. Labor costs can vary based on many factors, but the local cost of living, which influences hourly labor rates, is the most important cost factor to consider. Costs will be higher in more expensive areas, such as major cities, as hourly rates scale with the local cost of living.
Labor costs can also fluctuate based on the amount of work you need done. Simply swapping out one propane furnace for another will help keep costs low, but you can expect to pay more for labor if you also need to install a new propane tank, if your propane lines need to be replaced, or if your project involves converting from one fuel source to another or working in tight utility closets with minimal space to move around.
Propane Tank Costs
If you don’t already have a propane tank on your property, you’ll need to install one for proper furnace functionality and reliability. Installing a whole-home propane tank costs between $600 and $2,500, on average, but prices depend on the size you need and what prep work your expert needs to do before installing. In most cases, you’ll need at least a concrete slab installed to house your new fuel tank.
Additional Costs and Considerations
The size, efficiency, and furnace type will affect the cost to replace a propane furnace the most, but there are some other minor cost factors and considerations to think about when installing a new propane furnace.
Propane gas line installation cost: Installing a gas line from your outdoor tanks to your indoor unit might be necessary if you don’t have existing lines to serve your furnace. Running these lines can add between $200 and $800 to your total.
Ductwork costs: Installing ductwork for the first time costs between $1,400 and $6,000, depending on home size and installation complexity. Most homeowners will be adapting existing ductwork to function with their new furnace, and minor repairs will cost between $5 and $45 per linear foot, on average.
Permits and inspections: Most municipalities will require permits for furnace replacement or initial installation. Permit fees can range from $50 to $1,500 based on where you live and the fee schedule your building department uses.
Removal and disposal of old furnace: Most furnace installers will include the cost of disconnecting and hauling away your old furnace in your initial estimate, but some will charge separately. Expect additional costs ranging from $50 to $330 to remove your old furnace if your pro charges separately.
Add-ons: You may also want to factor in the cost of optional upgrades that enhance your furnace’s performance and efficiency. Features such as a smart thermostat, improved insulation, or air duct sealing can increase your upfront costs but often lead to greater comfort and lower heating bills over time.
Warranty: Many furnace installers offer labor warranties to guarantee their workmanship. Generally speaking, companies that offer longer-lasting warranty coverage charge more for labor, but the upcharge could be well worth the investment.
Maintenance: It’s a good idea to budget for long-term maintenance for your new furnace to avoid surprise charges down the road. Routine furnace maintenance averages $70 to $300 per year, which typically includes an annual inspection and basic tune-up.
Brand: The brand of furnace you choose can affect upfront costs and also system longevity, which plays a key role in long-term costs. Generally speaking, high-end brands like Trane, Lennox, and Carrier are going to cost more than budget-friendly brands, like Goodman and Bryant.
Cost to Run a Propane Furnace
The cost to run a propane furnace varies widely based on home size, furnace size, furnace efficiency, local climate, and local propane prices. According to the U.S. Energy Information Administration (EIA), the average cost of propane is $2.43 per gallon. The average home in the U.S. uses around 80 gallons of propane per month during peak heating season, which puts typical monthly heating costs at $195. Expect to spend more in extremely cold climates and significantly less in hot climates, where minimal heat is necessary.
Replacement vs. Repair
If you have an existing propane furnace that’s failing, one of the first things you should decide is whether furnace repair or a total replacement is a better idea. Furnace repair costs an average of just under $580, while a total replacement pushes your average costs up to $4,800. A good rule of thumb is the 50% rule; if the repair cost is more than half the price of a new unit, replacement is usually the better option.
Repairs are almost always going to be more affordable upfront, but there are some cases where a replacement will save you more money over time. Replacement is often the smarter long-term option if your furnace is nearing 20 years old, has frequent breakdowns, or no longer heats your home evenly after an expansion. Upgrading to a high-efficiency model can also lower heating bills and improve comfort. In general, if you’re facing costly or repeated repairs, replacement is likely the better investment.
Cost to Convert to a Propane Furnace
Converting to a propane furnace might be a good idea if you currently have an oil-fired heating system and want to reduce your carbon footprint, or if you have an electric heating system that isn’t providing sufficient heat. Conversion will require installing tanks and a fuel line running from your tanks to your furnace, in addition to the furnace cost. On average, the cost to convert to a propane furnace typically ranges from $275 to $13,300, depending on whether you buy or rent the propane tank, and the type of system you’re converting from.
Conversion type | Average cost with tank rental | Average cost with tank purchase |
Natural gas to propane | $275 – $800 | $1,900 – $4,900 |
Electric to propane | $2,000 – $5,700 | $3,700 – $9,800 |
Fuel oil to propane | $2,400 – $9,200 | $4,000 – $13,300 |
Ways to Save on Propane Furnace Costs
Installing a propane furnace can be an expensive home improvement project, but there are some things you can do to help keep costs to a minimum:
Look for rebates and incentives. Check the Database of State Incentives for Renewables and Efficiency (DSIRE) to see if there are rebates or incentives available, particularly for high-efficiency propane furnace costs.
Have your system professionally sized. Have a professional size your system to ensure you’re not overpaying for an oversized unit or installing an undersized furnace that will break down more quickly.
Plan your replacement for spring. Schedule your replacement for the spring, if possible, as lower demand for HVAC techs can sometimes lead to discounts on labor costs.
Get multiple estimates. Get at least three estimates for the replacement to compare and find the best value.
Consider a high-efficiency furnace. Although more expensive upfront, it can lower energy bills over time, especially if you live in colder regions.
DIY vs. Hiring a Pro
Replacing a furnace of any type is a job best left to a professional. Not only do most municipalities require that licensed professionals carry out the work for a legal installation, but working with any fuel source can be dangerous. Hiring an expert will ensure a safe installation that’s properly permitted and up to code.
Additionally, making mistakes as a DIYer is very easy. Something as simple as sizing your furnace improperly can lead to short-cycling or an overworking furnace, both of which can increase wear and tear on your unit and shorten its lifespan, meaning higher long-term replacement costs. Improper installation can also void your furnace’s warranty. Many pros offer guarantees for their work, so it’s often worth investing in professional installation for the long-term safety and peace of mind it provides.
FAQs
A typical 1,500-square-foot house needs a furnace with a BTU rating of between 45,000 and 90,000, which costs between $2,500 and $5,500. Your costs could be higher or lower, depending on the local climate and other factors, like ceiling height and insulation quality.
Heating your house with propane is usually more cost-effective than heating with oil, but it’s more expensive than heating with natural gas or electricity, in most cases. The average monthly heating costs with propane will be around $195, so you can compare this to local oil consumption and per-gallon prices, as well as gas prices and electricity costs to find the best deal on home heating.
The biggest downsides to a propane furnace are the operating costs, which are higher than what you’d expect with a natural gas furnace or an electric furnace, as well as the fact that you can run out of gas if you forget to refill your tanks. Propane furnaces are also more expensive to install than natural gas and electric furnaces.
The 80/20 rule for propane states that your tank capacity should only be about 80% right after it’s filled. This leaves 20% of the tank space to accommodate expanding liquid propane, which changes in volume based on ambient temperature. The 80/20 rule is a safety measure that helps prevent pressure problems as outdoor temperatures fluctuate.