HeatPumpLab

Heat Pump vs. Gas Furnace Cost Calculator (2026)

Compare upfront install, annual operating cost, and 10-year total cost of ownership for any US home.

The short answer

A heat pump and a gas furnace usually cost similar amounts to install once you remember the gas path also needs a separate AC unit. Whether a heat pump is cheaper year over year depends on your local electricity and gas prices and your climate — in mild regions with cheap electricity it usually wins, while in very cold zones with cheap gas it often does not.

Your home

We use these to estimate annual heating demand and install cost.

Electricity defaults from EIA (national 0.168, winter regional avgs); natural gas defaults from EIA residential prices (national 1.30/therm). You can override either below.

Verdict

Heat pump is $2,000 cheaper upfront but $230/yr pricier to run — that upfront edge is eroded after about 8.8 years.

Over 10 years, gas + AC is about $280 cheaper total.

Annual heating cost

Heat pump

$740/yr

4,416 kWh electric input

Gas furnace

$510/yr

395 therms burned

Heat pump runs about $230/yr more than the gas furnace at these rates.

Cooling operating cost is roughly equal for both paths (a heat pump in cooling mode ≈ a central AC), so it cancels and is not counted here.

Upfront install

Heat pump

$9,500

Heats and cools — one system

Gas furnace + AC

$11,500

Furnace $6,000 + AC $5,500

10-year total cost of ownership

Heat pump

$16,920

$9,500 install + 10 × $740

Gas furnace + AC

$16,640

$11,500 install + 10 × $510

Sources

This calculator uses:

Electricity + natural gas price defaults come from EIA (national + winter regional avgs). Heat pump seasonal COP is derived from ENERGY STAR HSPF2 via HSPF2 ÷ 3.412. Furnace AFUE tiers are anchored to ENERGY STAR (≥90% South, ≥95% North). No federal tax credit is applied — both 25C and 25D expired Dec 31, 2025 (IRS FS-2025-05 / OBBBA).

This is a heating-only fuel-vs-electricity comparison for a home with existing ductwork. Cooling is treated as a wash (heat pump in cooling mode ≈ central AC), which is why the AC checkbox only changes the gas-furnace path. The verdict is highly sensitive to the therm-to-kWh price ratio: at the same delivered BTU, a heat pump beats a 95%-AFUE furnace whenever your electricity price ($/kWh) is less than about 0.09× your gas price ($/therm). Anything that changes ductwork, adds a panel upgrade, or ships electric-strip backup isn't captured here.

Fuel-price sensitivity — where the verdict flips

For a Mixed-climate 2,000 sq ft home with average insulation, a 95%-AFUE furnace vs a HSPF2 8.5 heat pump, here is the annual heating cost at four common EIA-region price combinations. Bold = the cheaper path.

EIA regionElec $/kWhGas $/thermHeat pump/yrGas furnace/yr
Northeast0.2441.55$1,220/yr$895/yr
Midwest0.1571.01$785/yr$585/yr *
South0.1511.37$755/yr$790/yr
West0.1981.47$990/yr$850/yr

* Midwest has cheap gas andcheap electricity, so the gas furnace wins on annual heating cost alone — but the heat pump replaces the AC on the same install, which is where the 10-year TCO story often flips. Rule of thumb: whenever $/kWh < 0.09 × $/therm at a 95% furnace and 2.5 seasonal COP, the heat pump is cheaper per delivered BTU. Below that ratio, gas is.

How this calculator works

We estimate how much delivered heat your home needs in a year (kWh of heat), then divide that by each system's efficiency to get fuel input. The fuel input times your local price gives annual operating cost.

  • Annual heat demand = 5.5 kWh/sq ft (the mixed-climate, average-insulation reference) × your home size × a climate factor (Hot 0.35 to Very Cold 2.30) × an insulation factor (Poor 1.30 to Well-insulated 0.75).
  • Gas furnace operating cost = heat demand ÷ AFUE → divide by 29.3071 kWh/therm to get therms → multiply by your gas price.
  • Heat pump operating cost = heat demand ÷ seasonal COP (we convert HSPF2 → COP by dividing by 3.412) → multiply by your electricity price.
  • Upfront installuses national base equipment prices (gas furnace, central AC, heat pump) scaled by a region cost multiplier × an install-difficulty factor (good ductwork to complex retrofit). The combined multiplier is capped at 1.50× so a single extreme input can't blow up the install estimate.
  • Cooling cost cancels.A heat pump in cooling mode works like a central AC, so cooling kWh is roughly the same on both paths and we don't double-count it. The cooling decision shows up in the upfront comparison instead.

The crossover insight depends on which path is cheaper upfront and which is cheaper to run: if the heat pump is more expensive upfront but cheaper to run, we report a payback period; if it's cheaper upfront but pricier to run, we report how many years until that upfront advantage erodes; if one path is cheaper on both fronts, it wins outright.

Frequently asked questions

Is a heat pump cheaper than a gas furnace?
It depends on three things: your climate, the price of electricity vs. natural gas in your area, and whether you also need air conditioning. In mild and warm climates with average or cheap electricity, a heat pump is almost always cheaper to install (because it replaces both furnace and AC) and cheaper to run. In very cold climates with cheap gas, a high-efficiency gas furnace plus AC can be cheaper to operate, though heat pumps often still win on upfront cost when AC is already needed.
What is the payback period of a heat pump vs. a gas furnace?
If you're replacing both a furnace and an aging AC, a heat pump often has no payback period at all — it's cheaper upfront. When the heat pump is more expensive upfront, typical paybacks run 3 to 10 years for warm and mixed climates, and can stretch beyond 15 years (or never break even) in cold climates with cheap natural gas. Use the calculator above with your actual rates to get a personalized number.
Do heat pumps work in cold climates?
Yes. Modern cold-climate heat pumps (HSPF2 around 9 or higher) deliver useful heat at outdoor temperatures of -15°F and below, and most are rated to keep 70–80% of their capacity at 5°F. In very cold zones it's common to pair a cold-climate heat pump with a small backup — electric resistance strips or a retained gas furnace in a dual-fuel setup — for the coldest days of the year.
Does a heat pump replace your AC?
Yes. A heat pump is mechanically a reversible air conditioner: in summer it works exactly like a central AC. Installing a heat pump replaces both the furnace and the AC with one outdoor unit and one indoor air handler, which is why heat pumps are often cheaper upfront than the gas-furnace-plus-AC path when both need replacing.
How long do heat pumps last compared to gas furnaces?
A heat pump typically lasts 15 to 20 years, similar to a central AC. A gas furnace typically lasts 15 to 25 years. Because a heat pump runs year-round (heating and cooling) it accumulates run hours faster than a furnace, which is one reason calculators usually compare on a 10-to-15-year window rather than full lifetime.
Do I need a backup heat source with a heat pump?
In hot, warm, and mixed climates, no — a properly sized heat pump handles 100% of heating. In cold climates, electric resistance backup is standard and cheap to add. In very cold climates, many homeowners keep a small gas furnace as backup for the coldest week of the year, called a dual-fuel setup; the calculator above doesn't model dual fuel explicitly but you can approximate it by lowering the gas furnace efficiency tier and toggling AC off.

Where this comparison is weakest:dual-fuel setups (a small furnace kicks in below the heat pump's balance point) aren't modeled explicitly — closest approximation is toggling AC off and picking a lower gas AFUE. The tool also assumes existing usable ductwork on both paths; a heat pump into a boiler-heated (radiator) home is a different job priced by the vs. boiler calculator. Panel upgrades, structural mounting, and gas-line moves are excluded. HeatPumpLab does not sell leads or affiliate with any installer network — always get written quotes from licensed contractors before deciding.