Furnace Installation Cost Breakdown
Where does the money go when you install a new furnace? Full transparency on every cost component so you can evaluate contractor quotes with confidence.
Typical Cost Allocation
For a standard gas furnace installation at $5,500 (national average).
Equipment Costs
The furnace unit itself is the largest single expense. What you pay depends on fuel type, brand, efficiency, and capacity.
| Price Point | Equipment Cost | What You Get |
|---|---|---|
| Budget | $800 - $2,000 | 80% AFUE, single-stage, budget brand (Goodman, Amana) |
| Mid-range | $2,000 - $3,500 | 90% AFUE, two-stage, mid-tier brand (Rheem, Ruud) |
| Premium | $3,500 - $5,000+ | 95-98% AFUE, variable-speed, premium brand (Carrier, Lennox, Trane) |
Labour Costs
Labour is the second-largest expense, typically 25% to 35% of the total. Rates vary significantly by region and installation complexity.
Standard Replacement
- Duration: 6 to 8 hours
- Cost: $1,000 to $2,000
- Includes: removal of old unit, installation of new unit, connecting gas/electric, testing, and cleanup
- Crew: typically 2 technicians
Complex Installation
- Duration: 10 to 14 hours
- Cost: $2,000 to $3,500
- May include: new gas line, ductwork modifications, new venting (condensing upgrade), electrical panel work
- Crew: 2 to 3 technicians
HVAC labour rates: Southeast $60 to $90/hour, Midwest $70 to $100/hour, Northeast $90 to $130/hour, West Coast $100 to $150/hour.
Permit Costs
Most municipalities require a building permit for furnace installation. The contractor should pull the permit on your behalf.
Typical range: $50 to $400 depending on municipality
What it covers: Permit filing, plan review (if required), and a post-installation inspection by the building department
Why it matters: The inspection confirms the installation meets code. This protects you, validates your warranty, and is important for home insurance claims
Red flag: If a contractor suggests skipping the permit to save money, find a different contractor. An unpermitted installation voids your warranty, can cause insurance issues, and may create problems when you sell the home.
Old Furnace Removal
| Removal Type | Cost |
|---|---|
| Standard gas/electric furnace removal | $100 - $300 |
| Oil furnace removal | $200 - $500 |
| Oil furnace + above-ground tank removal | $700 - $1,500 |
| Oil furnace + underground tank removal | $1,500 - $3,500 |
| Asbestos-containing ductwork removal | $2,000 - $5,000+ |
Ductwork Modifications
Not always needed, but common in older homes or when changing furnace size or type significantly.
| Scope | Cost | When Needed |
|---|---|---|
| Minor adjustments | $200 - $500 | Connecting new furnace to existing ducts with minor sizing changes |
| Moderate modifications | $500 - $1,500 | Adding or rerouting a few duct runs, sealing leaky ducts |
| Full duct replacement | $2,000 - $5,000 | Old, damaged, or asbestos-containing ductwork; switching from radiant to forced air |
Furnace + AC Combo Pricing
Many homeowners replace both the furnace and air conditioner at the same time, which saves on shared labour and permits.
Combo Cost
$7,000 - $15,000
Savings vs Separate
$500 - $1,500
Why Cheaper
Shared labour, one permit, one thermostat install
See CentralACInstallCost.com for full AC pricing details.
Hidden Costs to Watch For
Smart thermostats required for two-stage and variable-speed furnaces
Needed if existing line is undersized for new furnace
Some high-efficiency furnaces need dedicated circuits
Bringing existing installation up to current building code
Required by code in most jurisdictions for gas/oil furnaces
Needed for condensing furnaces without floor drain access