Heat Pump vs Furnace: Which System is Right for You?

| Last Updated: September 9, 2021

Are you lost on what system to choose between a heat and a furnace?

Well, many people usually are. And it gets harder to decide when you have very little or no knowledge of how the systems work and what each can do. We have found that one is ideal for people looking for both heating and cooling, and the other for those who want heating only.

Let’s start from the bottom up.

TL; DR: Heat Pump vs Furnace

Heat Pump



Heat Pump

Provides cooling, heating, and dehumidification

High efficiency up to 300% of electrical energy consumed 

Safer from accidental fires 


Requires less maintenance

Heats spaces faster than heat pumps


Heat Pump

Prone to breakdowns and requires expensive regular maintenance and repair.

Some types like geothermal pumps are expensive to install


Prone to accidental fires since it relies on fuel combustion.

Provides only spatial heating.

Requires complementing with other HVAC devices like ACs

Best For

Heat Pump

Best for people looking for both heating and cooling from one appliance.

Best for people strict on higher efficiency and low carbon footprint


Best for people in areas not connected to the mains electricity.

Best for people looking for spatial heating only

What is a Heat Pump and How Does it Work?

A heat pump is a versatile HVAC appliance for heating, cooling, and even dehumidification of indoor spaces. Heat pumps are very similar in appearance to air conditioners on the face, save for that they have a reversing valve that ACs lack. 

The one thing that sets heat pumps apart from other heating, ventilation, and air conditioning (HVAC) appliances is their versatility. They can work as dehumidifiers on top of their two primary purposes – heating and cooling. 

However, the same versatility is their greatest undoing since performing both heating and cooling on the same system exposes them to many problems such as failure to heat, cool, or even start when you want to use them. 

A heat pump works by transferring heat from one location to another. It does not generate heat in any way. 

When set to heating mode, a heat pump draws heat from the outdoors and transmits it through the refrigerant to the indoor air handler for distribution throughout the space you want to heat. 

In the cooling mode, heat pumps transfer heat energy in an indoor space to the outdoor unit through the refrigerant, where it releases into the atmosphere. 

Basically, this is how an air-to-air heat pump works. Other types work using the same heat transfer concept as well. 

Types of Heat Pumps

There are several types of heat pumps. The classification depends on the source of the heat energy the system uses. 

Air Source Heat Pumps

As the name suggests, an air-source heat pump transfers heat between outdoor air and indoor air depending on the mode you want to run. They comprise an outdoor unit connected to an indoor unit, a setup that minimizes space usage. 

Air-to-air heat pumps are excellent and cheap since they can draw heat from the outdoor air even when it’s cold outside. However, they lose their efficiency as temperatures go lower and lower. 

Ground Source Heat Pumps

Also known as geothermal heat pumps, ground-source heat pumps use the heat energy absorbed by the ground from the sun or atmosphere for heating. They are advanced systems with underground pipes carrying a mix of a refrigerant and an antifreeze. 

It’s costly to install a geothermal heat pump, but the effort pays off in the long run due to reduced HVAC expenses. The ground is a more stable heat source than air, and a ground source system is more efficient than air-source heat pumps. 

Water Source Heat Pumps

A water-source heat pump uses water from a well, borehole, river, or other suitable water body for heating and cooling your home. The system is similar to that of a ground-source heat pump, with underground pipes carrying the refrigerant. 

Water-source heat pumps are also expensive to install, but you get value for your money by reducing running costs as water is also more stable than air as a heat source. 

Absorption Heat Pumps

Also called gas heat pumps, absorption heat pumps use natural gas as fuel and do not have any refrigerant like their electric friends. They are highly efficient, more than furnaces, in temperate climates. 

Gas heat pumps are cheaper to run, but your property must be connected to the national natural gas mains supply. Otherwise, they are not an option for you. 

What is a Furnace and How Does it Work?

A furnace is a heating appliance that uses gas, electricity, or oil to generate heat. A fuel-powered furnace burns the combustible gas or oil to produce heat, while an electric one heats indoor spaces when air blows through a heated element. 

Compared to heat pumps, furnaces have one major downside: they are only capable of heating. If you also need cooling or air conditioning, you’ll have to buy and install another HVAC unit for the same. 

However, furnaces heat your indoor space much faster than heat pumps. 

Types of Furnaces

A furnace can be gas- or oil- or propane-fueled based on the type of fuel or power source. You’ll also find the more friendly and space-saving electric furnaces. 

Gas and Natural Gas Furnaces

Gas and natural gas furnaces use gas piped to your home or LPG fuel to generate heat through combustion. If your home is connected to natural gas supply, this can be a cheap way to heat your space. LPG is highly expensive, and you have to keep refilling the tank. 

Diesel and Propane Furnaces

Like other fuel furnaces, propane and oil (usually called diesel) rely on the same principle of combustion for heating. Oil-fueled furnaces are common in older properties, while propane ones are more modern but costlier. 

Electric Furnaces

If you are a stickler for high efficiency, electric furnaces are a good option for heating. They heat indoors by blowing air over an electrically heated element, which boosts efficiency as the furnace can produce up to 250 times the energy it consumes. 

Relevant Characteristics Between a Heat Pump and a Furnace

Here’s a handy side-by-side comparison between heat pumps and furnaces for quick understanding at a glance. 

      Heat Pump          Furnace
Energy EfficiencyAbout 300% of electrical energy used95-98% of the fuel burned
Running CostLow due to low electricity consumptionHigh due to fuel costs
Space RequirementRequires less indoor spaceRequires larger indoor space for enough clearance
NoiseLow unless units are faultyMinimal noise restricted to just a hum 
InstallationCheaper to install for air-source models ($2,000-$4,000)About $4,500 for gas furnaces
Lifespan and Maintenance10-15 years Requires a lot of maintenance10-15 years Requires less maintenance

Similarities and Differences

Now that we know the basics of what heat pumps and furnaces are and the different types of each, let’s look at their differences and their similarities. 

Heat Pump and Furnace Differences

Heat pumps and furnaces may belong to the same class of appliances based on their purpose, but they have differences – making one a better choice for certain situations. 

Photo credit: Obrienservice.com

Heating Capacity

Furnaces heat indoor spaces faster than heat pumps. While both involve setting the desired temperature for heating, a furnace reaches this faster than a heat pump. 

The slow heating nature of heat pumps owes to the fact that they transfer heat from a source such as water, air, or the ground rather than generate their own. 

If you want to heat your space faster or only want to heat, a furnace will be your go-to heating appliance. 


An air-source heat pump is cheaper to install than a heating-only furnace. An air-to-air heat pump will set you back about $3,500, while an electric furnace costs about $4,000 and a gas one about $4,500 to install. 

The downside here is that not all types of heat pumps are cheap to install. The more complex and detailed ground- and water-source heat pumps can drain as much as $25,000 to install. 

Energy Efficiency

Since they use electricity as the power source, heat pumps are more energy-efficient than furnaces. The latter rely on combustion to produce heat, a process prone to wastages as not all burned fuel energy turns into heat energy. 

A heat pump can transfer up to 300 times more heat energy than the little electrical energy it consumes. You might want to use a heat pump for greater efficiency and low electrical energy consumption, translating into slashed power bills. 

Running Cost

It’s cheaper to run a heat pump than a furnace. As mentioned, the former uses little electrical energy since it doesn’t have to generate any heat. The latter relies on fuel combustion for heat generation, a process whose running costs can be a little intimidating if your home is off the natural gas grid and you have to use LPG, propanone, or oil. 

Space Requirement

A heat pump requires less indoor space for installation and operation compared to a furnace. The indoor unit of a heat pump requires a space clearance of at least 24 inches on either side. 

On the other hand, furnaces use more space as fire safety precautions necessitate a clearance of at least 30 inches all around the appliance. If you are pressed for indoor space, consider buying a heat pump instead. 

Heat Pump and Furnace Similarities

Despite the many differences between them, heat pumps and furnaces still have a few things they share. 


Both furnaces and heat pumps have a common lifespan of 10-15 years. With proper usage, maintenance, service, and repair, a typical heat pump or furnace can last for up to 20 years. 

Photo credit: Callthiele.com


Although heat pumps perform more functions than furnaces, they share the same purpose of heating. The system you choose will depend on whether you want heating only or both cooling and heating. Perhaps you need some dehumidification as well. 

Other Factors in Choosing Between Heat Pump and Furnace

Besides the factors discussed above, you might want to consider a few others to ensure you make a clean decision between a heat pump and a furnace.

Since heat pumps lose efficiency as temperatures go lower beyond 40 degrees, they are more suitable for warmer climates. In the US, the best places to use heat pumps would be locations within Zone 1-3, where the winters are extreme. 

If you live in a cold climate region, you’ll be better off using a furnace since it heats faster, and the prevailing outdoor cold does not reduce its efficiency. 

Heat pumps are more efficient and are a better option for those looking for an efficient way to heat or cool their homes. They also have a reduced carbon footprint, making them the preferred choice for people highly conscious of their impact on the environment. 

Photo credit: Mymove.com

What About a Boiler?

While some heat pumps may offer both space heating and domestic water heating solutions, they are not the only solution. 

Where electricity is not available because the property is off-grid, people use natural gas or Liquefied Petroleum Gas (LPG) for space, water heating, or both. Boilers are similar to furnaces because they use fuel and rely on combustion for heat generation.

Just like furnaces and heat pumps, boilers also come in different types. 

Conventional or heat-only boilers are old-fashioned heating appliances usually used for domestic water heating. They comprise a hot-water cylinder and cold water tank for holding water. An immersion heater may be present in some models as a backup during boiler breakdowns. 

System boilers are used for heating and eliminate the need for a cold storage water tank. Their operational system is similar to that of heat-only boilers, only that they have fewer components. 

A filling system supplies cold water directly to the system boiler for heating and storage on a hot-water cylinder or radiator ready for use whenever you run your water taps. 

Combi boilers are your best bet for both space and water heating needs. They have two separate heat exchangers. One of them connects to the hot-water system and the other to the radiators. 

A combi boiler does not require hot-water cylinders or tanks. The system has control valves for reversing the roles on-demand between heating space or water. 

Photo credit: Thegreenage.co.uk

Bottom Line

Choosing between a heat pump and a furnace doesn’t have to be hard when you have the right information on their workings, characteristics, and the different types you can choose from for your heating or cooling needs. 

A heat pump will be your best bet for both heating and cooling, while people who want cooling only will go for a furnace. However, this option requires using other HVAC appliances for additional needs, such as dehumidification and air conditioning. 

If you live in a cold climate region, buying a heat pump will be a great undoing since the unit loses efficiency and uses more electrical energy to heat or cool when temperatures go lower than 40°F. A furnace is the better option for cold climates. 

People Also Ask

This last section answers some of the questions people frequently ask about heat pumps and furnaces as space heating solutions. Take a look for a deeper understanding of the two systems. 

Does a Heat Pump Work in Extreme Cold?

Heat pumps can absorb heat from outdoor air even when it is cold outside. However, this is limited. Extreme temperatures lower than -7°F usually cause heat pumps to stall or stop working altogether.

How Cold is Too Cold for a Heat Pump?

Temperatures below 40°F reduce the efficiency of heat pumps, and it keeps going lower as the temperatures go lower and lower. Most heat pumps will start work at temperatures below -4°F, but some stall or shut off altogether at temperatures -7°F and below. 

Does Outside Temperature Affect a Furnace?

A drop in temperature outside the house also causes a reduction in indoor temperature, making the furnace work harder to keep your home warm. Generally, the furnace’s efficiency will drop by about five degrees with every five-degree temperature drop outside.

How Long Should a Furnace Run in Cold Weather?

There’s no harm in letting a furnace run as long as it can in cold weather. If the conditions are too extreme for it, the furnace will shift from heating cycles of 2-3 hours to longer cycles – which is still safe for it.

In moderate temperatures, the cycles run for about 10-15 minutes. 

What Is Cheaper To Run, a Heat Pump Or Gas Furnace?

Running a heat pump is cheaper than a gas furnace. First, heat pumps are highly efficient and convert the little electrical energy they use to heat energy by up to 300 times. Gas furnaces rely on combustion and achieve between 95 and 98% efficiency.

The higher efficiency in heat pumps, low use of electrical energy, and eliminating the need for expensive gas make them cheaper to run


My name is Bob Wells and I am a retired HVAC tech from Washington state. I am currently retired and no longer do much with HVAC, however, I feel like I have a lot of knowledge in the subject and I wanted to create a website where I could talk about what I've learned and help upcoming HVAC techs. Find more info about me and HVAC Training 101.