Types of Furnace: How to Choose Proper Furnace

There are four types of furnaces in use heating American homes today.

Residential Furnace Types:

  • Gas furnaces – both natural gas and propane.
  • Oil furnaces
  • Electric furnaces
  • Wood furnaces

Overview of Residential Furnace Options

Where you live has a lot to do with the right furnace for your home. But that’s not the only criteria when deciding “what is the best furnace for my home.”

1). Gas furnaces fueled by natural gas (NG) are easily the most common and are used across the US. A recent U.S. Census Bureau American Housing Survey found that 65.3% of homes have a gas furnace.

They are most densely concentrated in northern climates where heat pumps aren’t effective. Keep in mind when thinking about furnace vs heat pump, if you don’t get a lot of freezing weather, a heat pump is a more efficient choice than a furnace.

2). Propane and wood furnaces are popular In rural areas with no natural gas lines. Of course, wood furnaces make the most sense where wood is plentiful.

3). Oil furnaces are used in the northeast, predominantly, where gas fuels are scarcer. Wood furnaces are also popular in this region of the country.

4). Electric furnaces are a good choice only in warm climates that require little heat. They are cheap to buy, but expensive to operate, so they are best used where heat is needed during a rare “cold snap.”

Furnace Types

This overview chart makes it easy to quickly compare furnace types and consider which ones might be best for your home.

A deeper look at details follows.

Type Sizes in BTU/h Cost Pro Con
Gas/Propane 40K to 160K BTU/h $2,400 – $7,000 Affordable/Reliable Less efficient than a heat pump
Oil 60K – 160K BTU/h $3,500 – $10,000 Locally available Costly and not as efficient as gas
Electric 10K – 30K Kilowatts $2,000 – $4,000 Low upfront cost High operating cost
Wood 100K – 400K BTU/h $6,000 – $12,500 Fuel can be cheap Must be “fed”

Gas Furnaces – both natural gas and propane.

Lennox Gas Furnace

It isn’t an overstatement to say that the development of the gas furnace has changed the world. More homes worldwide are heated with a gas furnace than any other type of heating.

This section is about natural gas furnaces and propane furnaces.

System Operation:

These are the most common furnace type, so the explanation will be the longest.

Gas furnace operation is simple but brilliant.

The fuel is either natural gas (NG) that arrives to your home through local underground infrastructure or liquid propane (LP) that is fed to the furnace from a line to the tank in the yard.

An igniter – pilot lights are no longer used – ignites gas in the combustion box at the center of the furnace. Gas valves open at one, two or multiple capacities to supply gas to the furnace. The combusted gas exits your home through a heat exchanger and vent.

A furnace blower is a powerful fan. It pulls in cool air and passes it over the heat exchanger to heat it. Heat energy transfers from the combustion gas to the air circulating in your home. Air is never exchanged, since the combustion gas contains deadly carbon monoxide.

Features and Options:

Gas furnaces are manufactured in 1-stage, 2-stage and variable-capacity models. This has to do with indoor climate control and efficiency. Our Gas Furnace Buying Guide has comprehensive details.

Current gas furnace efficiency starts at 80% AFUE, or annualized fuel utilization efficiency. It is a measurement of how much heat produced by the furnace is transferred into your home. An 80% furnace loses 20% of its heat out the chimney.

Furnaces with a second heat exchanger do a better job of transferring heat before it escapes your home. They have AFUE ratings of 90% to more than 98%.

Pros and Cons:

The advantage of a gas furnace is that it is affordable, reliable and gives you efficiency options. If your home is in a warm climate, an 80% AFUE furnace is inexpensive. In cool-to-cold climates, furnaces with 90% efficiency and higher cut heating costs and perform well in sub-freezing temperatures.

Gas furnaces have little downside. In warm climates, heat pumps have higher equipment costs but lower energy costs.

Comparison to Other Types:

Gas furnaces cost about the same as oil furnaces. They are less expensive than wood furnaces and more costly than electric furnaces.

System Cost:

Gas furnace cost for the furnace, supplies and installation ranges from about $2,400 to $7,000.

Top Brands:

Consolidation of brands has impacted the HVAC/furnace industry. Here is a list containing most brands:

  • Trane/American Standard
  • Carrier/Bryant
  • Heil/Tempstar/Day & Night and other ICP/Carrier brands
  • Rheem/Ruud
  • Armstrong Air/Aire Ease
  • Lennox/Payne
  • York/Luxaire/Coleman
  • Daikin/Amana/Goodman
  • Maytag/Frigidaire/Broan

Best Use: Climates where temperatures drop below 50F for much of the winter. They are the best furnace option in the coldest climates – providing gas or propane is available.

Oil Furnaces

This can be quick. The main difference between an oil and gas furnace is fuel. Perhaps that is obvious. The Census Bureau survey results showed 6.1% of homes heating with fuel oil.

System Operation:

These furnaces are fired by home heating oil. Operation is the same as with gas furnaces, but the burners offer just 1-stage performance in most models. A few 2-stage burner models are manufactured.

How the furnace heats a home is the same. An igniter heats up, the burner valves spray heating oil into numerous heating chambers, and plenty of heat is produced.

Air is heated as it is passed over the heat exchanger and circulated through ductwork.

Features and Options:

Single-stage, or 1-stage, and two-stage oil furnaces are available.


Oil furnace capacity ranges from about 40,000 to 140,000 BTU/h of heat.

Furnace Efficiency:

Most oil furnaces have AFUE ratings of 80% to about 87%. If you want an oil furnace with 90%-plus efficiency, you’ll have to pay quite a premium for the equipment.

Pros and Cons:

Again, it is pretty simple. If you live where natural gas or propane isn’t readily available, but heating oil is, then an oil furnace is a good choice. Performance features are improving to, so indoor climate control is getting better with each generation of oil furnaces.

The downside is that oil furnaces cost more to operate than natural gas furnaces. They cost more than electric furnaces but cost less to run.

Comparison to Other Types:

Here is the bottom line – the only reason to choose an oil furnace is that you can’t get an affordable NG or LP gas furnace where you live. If gas is readily available via pipes or a tank, then don’t consider an oil furnace. In fact, your local furnace installers won’t offer oil furnaces.

System Cost:

Oil furnaces cost around $3,500 to $10,000 based on heating capacity and features. The average cost of a new oil furnace installed is $5,800

Top Brands:

Many mainstream heating and air conditioning brands make oil furnaces. There are important oil furnace specialty brands too.

Look for oil furnaces from mainline brands plus Olsen, Thermo Pride, Williamson/Thermoflo, Miller, Adams and Kerr.

Best Use: Oil furnaces are the best fit for furnace replacement of an oil furnace. If you don’t “have to have” an oil furnace, there is no reason to choose one.

Electric Furnaces

These are high-energy space heaters that cost plenty to operate, but they’re quite affordable. These facts make them a good fit for warm climates – and a terrible choice in cool/cold climates. They are found in about 4.1% of homes nationwide, but again, mostly in the South.

System Operation:

Large electric coils heat up using resistance heat technology. When the air created is hot enough, the furnace blower pulls in cool air, heat is added to it, and warmer air is blown into your home.

Features and Options:

There are very few options. Some electric furnaces have low and high settings, which means either one set of heaters or both heaters will be in use.

System Efficiency:

You will read that electric furnaces are 100% efficient. That’s true. All the heat they make is pushed into the home. However, the cost to make that heat is costly – typically produced in coal-fired power plants.

Pros and Cons:

Electric furnaces are inexpensive compared to other furnace types. And they last a long time – 17 to 25 years. If you rarely need heat, then a cheap electric furnace is a good choice.

The disadvantage is the lower efficiency of an electric furnace. They are not a good choice where heating is required throughout the cold months.

Comparison to Other Types:

These furnaces require less maintenance than other types. Using more energy, they are less ecofriendly than most furnaces.

System Cost:

The furnace with installation costs about $2,000 to roughly $4,000. But keep the higher-than-average operating costs in mind as you decide the best furnace for your home.

Top Brands:

Some of the best-known HVAC brands make electric furnaces. There are brands that specialize in electric furnaces too. The best brands include Carrier/Bryant/Heil and other Carrier brands, Goodman, York, Winchester and Kin.

Best Use: Electric furnaces should only be considered for homes in warm climates or part-time homes where little heating is required. In those settings, you can take advantage of their lower equipment costs.

Wood Furnaces

regency wood stove

This is a niche option, mostly used in rural areas where wood is abundant. In these areas, you’ll find a large number of homeowners using wood furnaces and boilers to provide heat, and in the case of boilers, hot water too. According to the American Housing Survey, 1.9% of homes are heated with wood.

In those areas, heating with wood creates very low heating costs.

Your options are wood furnaces and wood boilers.

If you want to heat household water too, enjoy in-floor or radiant heating, then a boiler is a great choice. Where heating only is needed, a wood furnace will do the job – as long as you feed it.

System Operation:

With a wood furnace, the wood burns, and heat is transferred through one or two heat exchangers into the airflow of your home.

This obviously means that pipes and ducts are run from the outside furnace to an air handler positioned inside the house to disperse the air warmed by the outdoor furnace. In the case of a wood boiler, the heat can be disseminated through an air handler or hydronic system using radiators and/or in-floor tubing.

Features and Options:

Wood furnaces don’t have as many options as gas furnaces. But features are available, such as furnaces that will burn pellets, corn or coal.

Wood furnace boilers provide domestic/potable hot water in addition to radiator heat.

System sizes are mostly 150,000 BTU/h to 240,000 BTU/h. But wood furnaces with 400,000 BTU/h capacity are available.

Pros and Cons:

If you have a readily available source of free or cheap wood, then heating costs can be quite low. If you choose a wood boiler, then domestic water heating cost will be low too. We’ve compared annual fuel costs for major furnace types.

Wood furnaces produce plenty of heat for your home, and homeowners with a wood furnace report having warmer, more comfortable homes than those that feel they have to conserve heat by keeping the thermostat at 70F or below.

The disadvantage of a wood stove is the higher initial cost compared with other furnace types. Additionally, a wood stove or boiler has to be fed with wood. Depending on the capacity of the wood furnace, it will require filling with wood every 10 to 36 hours.

Some will argue that a wood furnace adds to air pollution. It does. That’s true. But all furnace types do. Even the most efficient heat pump is run by electricity, and most is produced at power plants fueled by coal or oil.

Comparison to Other Types:

Cost is higher than average, but fuel costs can be much lower. Over the long-term, a wood furnace can save you money when wood costs are cheap.

System Cost:

These units start at about $6,000 installed, but most cost in the range of $8,500 to $10,000. The cost of some wood furnaces exceeds $12,000.

Best Use: Wood furnaces are a good choice where free or cheap wood for fuel is abundant. If you don’t have trouble adding wood to the unit, a wood furnace or boiler provides abundant heat.

Census Data on Heating

The most recent U.S. Census Bureau American Housing Survey yields interesting information about how we heat our homes.

The survey had 121,560 respondents. Here’s what we learned from the results.

How Many US Households Have Central Heat?

99.3% of households had some form of heating.

0.7% had no heat source.

Total: 100%

What Type Heaters Are Used in US Households?

65.3% of homes heated with a warm-air furnace, either natural gas or propane.

11.6% had an electric heat pump for heating and air conditioning.

9.1% heated with a hot water or steam system such as a boiler and radiator or radiant floor heating.

4.6% used a ductless heat system.

4.1% used a built-in electric unit, presumably an electric furnace.

1.6% had space heaters as their primary heat source.

1.2% heated with a wood stove or fireplace insert.

.6% had no source of heat.

3.5% used other sources, either not listed or items like a cooking stove or type of room heater.

Total: 100%

What is the Main House Heating Fuel?

120,712 households had some fuel source.

44.9% heated with electricity – mostly heat pumps, but also electric furnaces, space heaters and other electric resistance heaters.

43.5% used piped gas, most commonly natural gas (NG) to fuel a gas furnace.

4.4% heated with bottled gas such as propane in a tank or similar container.

4.9% used home fuel oil in an oil furnace.

1.9% heated with wood in a wood stove, fireplace or fireplace insert.

.4% used coal, coke or “other” source.

Total: 100%

What Kind of Secondary Heat Do Households Use?

84.6% of households had no second type of heating equipment in their home.

Here’s how it breaks down for the 15.4% that do have supplemental heat:

37.4% had portable electric heaters.

18.4% used their cook stove for supplemental heat.

13.3% of households had a stove, like a wood stove, for secondary heat.

12.4% had a warm-air furnace.

8.7% used an electric built-in unit like an electric furnace or room heater.

3.0% had a heat pump for backup heat.

9.8% used a gas oven with the door open or “other” type of heater for supplemental heat.

Total: 100%

Written by

Rene has worked 10 years in the HVAC field and now is the Senior Comfort Specialist for PICKHVAC. He holds an HVAC associate degree and EPA & R-410A Certifications.

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