How To Choose Between a Heat Pump vs. a Furnace

Updated: Jan. 11, 2024

Federal incentives and state regulations weigh heavily in favor of heat pumps these days, but a heat pump may not be the best choice for everyone.

If you’re considering an upgrade to your home’s heating system, you’ve got two powerful reasons to consider buying a heat pump over a furnace — especially if you live in California.

The first is the High Efficiency Electric Home Rebate Act (HEEHRA). Part of the Inflation Reduction Act (IRA) passed by Congress in 2022, it provides for rebates up to $8,000 for installing a new heat pump system. The second: The recent vote by the California Air Resources Board to ban the sale of new gas furnaces by 2030. Other states may follow.

Why the big move toward heat pumps? The answer — mainly — is that they run on electricity and don’t produce harmful emissions. The same is true for electric furnaces, of course, but heat pumps are far more energy-efficient.

And with ever-improving designs, heat pumps can keep a home comfortable even when outside temperatures drop as low as minus-10 degrees.

What Is a Heat Pump?

Think of a heat pump as an air conditioner in reverse.

If you turned your window air conditioner around, the warm air that usually dissipates outdoors would blow into your house — and you’d have a heat pump. Many heat pumps come with a reversing valve that lets them serves as heaters and air conditioners.

A heat pump employs the same type of cooling system as your refrigerator — a pair of copper coils separated by a tiny aperture, a refrigerant and a compressor. The compressor pressurizes the refrigerant in the condenser coils and turns it into a liquid, releasing heat.

The pressurized liquid sprays through the aperture and vaporizes in the evaporator coils, drawing heat out of the air. Then it cycles back to be re-pressurized. While an air conditioner fan circulates cool air from the evaporator coils into the house, a heat pump fan circulates warm air from those coils.

Heat pumps come in two parts. An outdoor unit houses the compressor, a set of evaporative coils and a fan. An indoor unit houses more condensing coils and another fan, usually in a separate structure called an air handler. A hose running through the wall connects the coils in the indoor and outdoor units.

Smaller indoor units with their own fans, called mini-splits, are also available to heat individual rooms.

What Is a Furnace?

Unlike a heat pump, a furnace generates heat by burning a fuel or passing electricity through a resistive element. It’s usually in the basement or a utility room, producing heat circulated through a ductwork system by a blower housed in the air handler.

All furnaces includes a heat source, heat exchanger and a blower. Some fuel-burning ones have flues to exhaust combustion gases.

High-efficiency gas furnaces don’t need flues. They recycle combustion gases to extract more heat, and emit only acidified water through a PVC drain pipe. Though they turn nearly 100 percent of their fuel into heat, it’s still fossil fuel, another reason why California plans to ban them.

Consider This When Choosing a Heat Pump vs a Furnace

If you’re building a new house or redoing your heating system, the HEEHRA incentives provide good reason to favor of a heat pump. In climates where temperatures fall below minus-10 degrees, however, a furnace is usually the most reliable option.

If your house is airtight and sufficiently insulated, a heat pump might work when combined with resistive heat strips in the air handler for emergency heat on the coldest days.

Heat Pump Pros and Cons


  • Low operating costs: A heat pump costs about half as much to run as a natural gas or electric furnace, and about one-third as much as an oil or propane furnace.
  • Low installation costs: Installation costs about the same as a conventional furnace, but about half as much as installing a high-efficiency furnace. Remember, the government incentive, can take a serious bite out of installation costs. To top it off, a heat pump also cools, so you’ll also save by not buying air conditioners.
  • Space saving: The working part of a heat pump mounts outdoors requires only 24 inches of clearance around it. The indoor unit needs even less clearance. Together with the air handler, it can often be mounted on a wall.


  • Not for cold climates: Air source heat pumps don’t work well in extreme cold. You can get around that by installing a ground- or water-source system. But that requires laying pipes underground or underwater, an expensive proposition.
  • Noisy:  The sound mostly comes from the compressor, which can be loud enough to disturb those in nearby rooms.

Furnace Pros and Cons


  • Quiet and unobtrusive: A furnace can be hidden away in a closet or basement. Other than the whoosh of the gas igniting or air blowing through the registers, it makes little noise.
  • Less maintenance: Requires only regular filter changes and vacuuming. There are no coils or compressors to monitor and maintain.
  • Longer lasting: A furnace is less complicated than a heat pump system and lasts 20 years on average, five years longer than a typical heat pump.


  • High operating costs: A furnace is generally more expensive to operate than a heat pump.
  • Source of air pollution: Combustion gases from standard-efficiency furnaces with flues pollute the air. High-efficiency furnaces don’t pollute, but are more expensive to buy and install.

Making the Final Decision

Heat pumps and standard-efficiency furnaces cost about the same to install, so the choice between a heat pump vs. a furnace pretty much comes down to your local climate.

In moderate climates, the decision to go with a heat pump is a no-brainer, especially with government incentives. However, because a furnace provides more reliable heat, it’s a better choice for extremely cold climates.

If your climate is somewhere between moderate and extreme, check with your neighbors to see if any are using heat pumps and if they’re happy with them. It’s also smart to consult local HVAC dealers. Heat pump technology keeps improving, and there may soon be one that’s right for you.