child looking outside of window in home holding stuffed bunny

Before settling on a new furnace, look into the available types of furnace systems to ensure you get the best furnace for your home. Some furnace systems are highly energy efficient, and others provide consistent heat during frigid temperatures. Your best furnace depends on your budget, climate, and other factors.

What Is a Furnace?

What is a furnace? A furnace is an appliance that generates heat and distributes heated air throughout a house. Most furnaces are components of a forced air heating system. A forced air system uses a blower fan and ductwork to distribute heat to every room in the house.

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Types of Furnaces

Furnaces are categorized by the fuels that power them: natural gas, propane, oil, electric, wood, and geothermal. All types of furnaces function similarly to provide heat, but each energy source has advantages and disadvantages.

U.S. Energy Information Administration heating fuel source map 2022
natural gas furnace installed in garage of home

Natural Gas Furnaces

Natural gas is the most common fuel for heating. 51% of the country, or 54 million homes, depend on natural gas heating, according to the United States Census Bureau. In a natural gas furnace, the gas is ignited in the furnace’s burner to warm the heat exchanger. The heat exchanger warms the cold air returning from the ducts. A fan or blower pushes the warm air through the ducts and registers to heat the home. Exhaust gasses are vented to the outside through a flue.

Natural gas furnaces have numerous advantages. First off, natural gas is convenient. Homes in populated areas can often access their municipalities’ natural gas supply, eliminating the need for a storage tank. Furthermore, natural gas is the most affordable fossil fuel and yields low energy bills. Gas is also an efficient heating fuel due to a large amount of heat it generates. The American Gas Association states that heat from natural gas furnaces is between 120 and 140 degrees Fahrenheit.

Despite the numerous advantages of gas furnaces, they also have drawbacks. Gas furnaces have higher upfront costs and shorter lifespans than electric furnaces. In addition, gas line access is unavailable in some places, mainly rural areas. Finally, there is the potential for CO2 poisoning if the furnace malfunctions or the flue is blocked.

Types of Gas Furnaces

single stage furnace illustration

Single-stage Furnace 

  • Most affordable to install and repair
  • Most basic; turns on and off
  • Always runs at 100% capacity
  • Produces hot and cold spots
  • Might struggle to heat homes during frigid temperatures
  • Less energy efficient
  • Best for small or single-story homes, mild winters, people on budgets, and short-term heating needs
two stage furnace illustration

Two-stage Furnace

  • More expensive to install and repair
  • High and low power settings
  • Produces consistent temperatures
  • Less noisy
  • Produces better indoor air quality
  • More energy efficient
  • Best for two or more stories, cold winters, people with flexible budgets, concerns about energy costs, and long-term heating needs
modulating furnace illustration

Modulating Furnace

  • Most expensive to install and repair
  • Dozens of power settings
  • Produces the most consistent temperatures
  • Less noisy, but the noise is more constant
  • Produces the best indoor air quality
  • Most energy efficient
  • Best for multiple-story homes, bitterly cold and extended winters, people with large budgets, and long-term heating needs
propane furnace tank outside of home in snow

Propane Furnaces

Propane furnaces are similar to gas ones but they use a different fuel. The propane gas is ignited in the furnace’s burner and warms the heat exchanger. The heat exchanger warms the cold air returning from the ducts. A fan or blower pushes the warm air through the ducts and registers to heat the home.

A propane furnace is a good alternative to a natural gas furnace. Propane-fueled furnaces typically have lower upfront costs and don’t require gas line access or flue installation. Like natural gas, propane fuel burns cleanly.

Unlike natural gas, propane furnaces require a supply tank of propane fuel and space for tank installation. The tank must be continuously refilled and maintained. Propane gas is also more expensive than natural gas, so propane furnaces cost more to run.

Oil Furnaces

Oil furnaces function similarly to gas and propane furnaces. A fuel pump brings oil from a storage tank to the furnace’s burning chamber. The oil is sprayed into the combustion chamber and ignited to warm the heat exchanger. The heat exchanger warms the cold air returning from the ducts. A fan or blower pushes the warm air through the vents and registers to heat the home.

Oil furnaces are extremely common in the Northeast but rare in other areas of the country. In fact, propane furnaces are not available in most areas. The only reason to install an oil furnace is to replace an existing oil furnace.

Despite their rarity, oil furnaces have advantages. They heat homes quickly due to the high BTUs emitted by burning oil and are easier to maintain. Compared to electricity, oil is a cheaper fuel.

On the downside, oil tanks require space for installation, and they must be continuously refilled and maintained. Compared to natural gas, oil is a more expensive fuel. Unlike natural and propane gas, burning oil produces tar and soot.

oil furnace tank outside of home
electric furnace installed in basement of home

Electric Furnaces

In an electric furnace, heating elements warm the cold air from the ducts, like a toaster warms bread. A fan or blower pushes the warm air through the ducts and registers to heat the home.

Electric furnaces stand out because of their affordability and long lifespan. They are among the cheapest to install and last 20 to 30 years. The lack of a flue or vent makes electric furnaces easy to install and maintain. They are suitable heating systems in mild climates.

Although electric furnace AFUE (annual fuel utilization efficiency) ratings are 95 to 100%, electricity is a highly inefficient heat source. In other words, electric coils heat up slowly, achieve lower temperatures, and consume more energy than other fuel sources. An electric furnace would yield unreasonably high energy bills in a cold climate.

Wood Furnaces

According to the U.S. Energy Information Administration, 10.8 million homes used wood as a heating fuel in 2020, and 2.2 million homes used wood as their primary heating fuel. Wood furnaces, also known as wood stoves, burn wood to provide heat. Smoke is vented through a chimney or vent pipe. Wood stoves achieve high temperatures, and the heat emanates in all directions from the stove. A wood stove can warm a home faster and more efficiently than a forced-air system. Some wood furnaces have blowers to distribute warm air to all parts of the room.

Wood stoves are versatile and can be installed in any room. They can utilize existing chimneys, or vent pipes can easily be added. As a fuel, wood is eco-friendly, carbon-neutral, reliable, available, and less expensive per BTU than oil, gas, and electricity. Wood stoves are great for supplemental and backup heating since they don’t require electricity.

As primary heating systems, wood furnaces have many disadvantages. They are unable to heat large houses; additional stoves are required. Wood furnaces require a steady supply of wood, which is only cost-effective if the supply is readily available. In addition, wood requires splitting, hauling, stacking, and storage space. Fires require regular tending and produce ash and soot.

wood furnace with fire burning inside of home
geothermal furnace installed in home

Geothermal Furnaces

A geothermal heating and cooling system, also known as a ground-source heat pump, transfers heat from within the earth to the home. During the summer, heat is extracted from the house and deposited in the ground for future heating needs, increasing heating efficiency.

There are three main types of geothermal heating systems. The vertical closed-loop system consists of a U-shaped pipe containing a water/methanol mix buried in a well. The horizontal closed-loop system functions like the vertical system, but the pipes are laid horizontally in a zigzagging pattern within a 300-foot-wide trench buried 6 to 10 feet below ground. The open-loop system transfers heat from groundwater pumped from a 75 to 100-foot-deep well. After the heat is transferred, the water is deposited in a second well.

Geothermal heating has advantages. Firstly, it is a sustainable heat source. Geothermal heating consumes less energy and distributes heat more evenly than traditional furnaces. Geothermal heat is sufficient for homes with mild winters. During summer, geothermal systems can cool homes.

Unfortunately, geothermal systems are costly to install, costing upwards of $30,000 for a 2,000-square-foot home. The return from energy-cost savings would take too long to receive, even though geothermal heating reduces energy costs by 50%. Furthermore, geothermal heat is insufficient in cold climates.

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Which Type of Furnace Is Best?

The best furnace for your house depends on your desires, needs, and circumstances. People with energy efficiency, budget, and other concerns will benefit from specific furnaces. Home size and climate are two other considerations.

Best Furnace for Energy Efficiency: Gas or Electric

Electric furnaces are 100% efficient in terms of the amount of fuel converted into heat. This designation is expressed as the AFUE rating. New gas furnaces are rated between 80% and 97%. Gas furnaces have lower AFUE ratings because some fuel is converted into exhaust.

Despite lower AFUE ratings, gas furnaces are a more efficient heat source. They heat up faster, achieve higher temperatures, and use less energy than electric furnaces. In addition, natural gas is a cheaper fuel than electricity.

Best Furnace for Homes on Budget: Wood or Electric

Wood furnaces are the most affordable, but they are not practical unless a supply of wood is readily accessible. Electric furnaces are affordable and more practical. However, electricity is an expensive fuel. While an electric furnace is cheaper initially, running it is costly.

Best Furnace for Smaller Homes: Electric or Gas

Electric furnaces have high operational costs, so they are preferable in small homes that heat up quickly. Gas furnaces are suitable for any size of home. They cost more at the outset, but operational costs are lower.

Best Furnace for Large Homes: Gas

Gas furnaces are best for large homes. These furnaces heat up quickly and achieve temperatures of 120 to 140 degrees Fahrenheit, making them good at heating houses rapidly.

Single-stage gas furnaces are suitable for large homes, but two-stage and modulating furnaces better maintain consistent temperatures throughout large homes.

Best Furnace for Warmer Climates: Electric

Electric furnaces are best for homes in warm climates with few heating needs. The high cost of electricity won’t outweigh the low furnace cost in temperate climates.

Best Furnace for Cold Climate: Oil or Wood

Oil and wood furnaces are suitable in cold climates where natural gas and propane are unavailable. Wood furnaces provide powerful heating but are impractical if a wood supply is not readily available. Oil furnaces heat homes quickly and more cheaply than electricity.

Frequently Asked Questions

What type is my central heating?

The label on your furnace might specify whether it’s gas or electric. Another option is to look up your furnace's brand and model number.

Gas furnaces usually have a window or access panel through which blue flames can be seen. Electric furnaces don’t have either; they have electric coils that heat up. Homes with propane or oil furnaces have tanks that need to be filled.

What type of furnace can cause carbon monoxide?

Natural gas, propane, and oil furnaces create carbon monoxide, a byproduct of burning fuel. The carbon monoxide from a properly functioning furnace is released outside through the flue. Avoid carbon monoxide poisoning by having your furnace inspected yearly and installing battery-operated carbon monoxide detectors throughout your home.

What type of furnace is most efficient?

Heat pumps, which capture and transfer heat, are the most efficient heating system for moderate climates. Natural gas furnaces are the most efficient heat source for cold temperatures.

AFUE ratings are only one piece of the puzzle. Despite the 100% AFUE ratings of electric furnaces, gas is more efficient at heating homes than electricity.

Another consideration is the energy source your home is set up to use. If your home is set up for an electric furnace, you must determine if switching to a gas furnace is possible and economical.

What type of furnace do I have?

If you see blue flames, your furnace is gas, and you hear the burners' firing during heating cycles. Your furnace is electric if you can't see inside it and don't hear the burners during heating cycles. Your furnace is propane or oil if you have a propane or oil tank.


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