How Much Does a Condensing Furnace Cost?

According to the old saying, only two things in life are certain: death and taxes. However, if you have an old or inefficient furnace, you may feel like adding sky-high heating bills to that list.

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Modern high-efficiency furnaces, also known as condensing furnaces, can help you regain control of your energy bills while improving the safety of your HVAC system.

The Skinny on High-Efficiency Condensing Furnaces

How Does a High-Efficiency Furnace Work?

Your average, run-of-the-mill, non-condensing furnace has one heat exchanger. Heat exchangers are the part of your furnace that turns fuel into heat. But heat exchangers aren't perfect in terms of energy efficiency. During the fuel-burning process, some heat is lost. And since that heat isn't used to warm up your home, you can consider that fuel (and the dollars it costs) basically burned up for no benefit.

The difference with a condensing furnace is that it has two heat exchangers. In a conventional furnace, the heat that is lost is often lost through water vapor and exhaust. The second heat exchanger in a condensing furnace uses those gases as fuel, effectively eking out just a little bit more heat — and more bang for your buck.

Is a Condensing Furnace Worth It?

The U.S. Department of Energy estimates that the most efficient condensing furnaces could save you $370 (CAD 503) on your energy bills per year, totaling a whopping $5,598 (CAD 7,611) saved over a typical 20-year unit life span. However, installing a condensing furnace is pricey, so it's worth knowing the costs involved to help you choose the best option for your budget.

How Much Does a Condensing Furnace Cost?

Condensing furnaces are more expensive up front than conventional, non-condensing furnaces. The average price of a gas-powered condensing furnace is $2,500 to $5,000 (CAD 3,399 to CAD 6,798), while non-condensing units start at around $700 (CAD 952).

High-efficiency oil-powered condensing furnaces are costlier than gas models, costing an average of $6,000 to $9,200 (CAD 8,157 to CAD 12,508), according to data from Forbes. For comparison, conventional, non-condensing furnaces usually cost between $3,500 and $7,500 (CAD 4,758 and CAD 10,197).

Bear in mind that condensing furnaces are more time-consuming (and costlier) to install than non-condensing units, assuming you don't already have a high-efficiency furnace installed. High-efficiency condensing furnaces have sealed combustion chambers that extract additional heat from exhaust fumes, which creates condensation. Therefore, your contractor must install a drainage system to prevent the condensation from accumulating.

Furthermore, your installer will likely need to change other aspects of your HVAC system to accommodate your high-efficiency unit. For instance, condensing furnaces usually require additional vents, costing between $200 and $250 (CAD 272 and CAD 340) per vent, according to Architectural Digest. Furthermore, you'll need to install a shared exhaust system if you don't already have one. Fixr says this costs an extra $1,500 to $2,200 (CAD 2,039 to CAD 2,991).

Factors That Influence the Cost of Installing a Condensing Furnace

Various factors impact the cost of a condensing furnace, including your unit size. Small units designed to heat compact houses are significantly cheaper than larger models for substantial family homes. You may also pay a premium for high-quality brands.

You may need additional HVAC system components to accommodate your new furnace, especially if you're switching fuel sources. Common upgrades required for condenser furnace installation include:

• New gas line: $200 to $1,100 (CAD 271 to CAD 1,496)

• Breaker box upgrade: $1,150 (CAD 1,563)

• Replacement thermostat: $50 to $500 (CAD 68 to CAD 680)

The cost of installation labor in your area may impact your final bill. HVAC professionals typically charge between $50 and $150 (CAD 68 and CAD 204) per hour, with contractors in rural, affordable areas usually charging lower rates. Meanwhile, experienced, highly qualified professionals and those in expensive cities often charge toward the top end of the scale.

You'll need to obtain a permit for your new furnace and have an inspection to check its safety. Costs vary by area but usually range between $320 and $950 (CAD 435 and CAD 1,292).

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Government Rebates and Incentives

High-efficiency condensing furnaces are more eco-friendly than standard models. Therefore, the government offers federal tax credits to encourage homeowners to install condensing furnaces. To qualify, your furnace must have an annual fuel utilization efficiency rating of 97% or higher. This program allows you to reclaim 30% of your installation costs up to a maximum of $600 (CAD 817).

Your energy provider may also offer rebates when you install a high-efficiency furnace in your home. Check with your provider to determine whether you qualify for incentives.

All CAD conversions are based on the exchange rate on the date of publication.