How Much Does a Heat Pump Cost?

By Geoffrey Sperring

November 04, 2025

Your home heating expenses keep rising, and you're at a loss for how to bring down heating costs without letting everyone get cold. The answer may lie in a heat pump.

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Instead of burning natural gas or another fuel to directly heat your home, a heat pump relies on the second law of thermodynamics, which states that it's possible to transfer heat energy from one area to another using the refrigeration cycle. Heat pumps are extremely energy-efficient and, in most areas, cost less to run than natural gas, propane or electric furnaces. Most models have a reversing valve, so the heat pump doubles as an air conditioner in summer.

How Does a Heat Pump Work?

A heat pump system works by moving heat energy from the outside air into a building. Because the heat pump transfers rather than generates heat, it's up to 3 times more efficient than a conventional gas furnace.

A heat pump works on the same principle as an air conditioner, only in reverse. It relies on a refrigerant that absorbs heat as it condenses from a gas to a liquid and then releases that heat as it evaporates back into a gas. Using a reversing valve, a heat pump also works as a normal AC unit.

Through careful design and the right choice of refrigerant, heat pumps can continue to work even when it's very cold outside. Cold climate heat pumps can absorb heat when the outside temperature is as low as -15 to -20 degrees Fahrenheit (-26 to -29 degrees Celsius). Most heat pumps are equipped with auxiliary heaters to maintain heat output during extremely cold weather.

What Are the Different Types of Heat Pumps?

There are many distinct types of heat pumps on the market, from whole-home units that replace conventional HVAC systems to mini split units for heating single rooms. Some are air source, meaning they get their energy from the air, while others use geothermal energy stored in the ground. Major heat pump brands include Carrier, Amana, Frigidaire, Lennox, Trane and York.

Air Source Whole-Home Split Heat Pumps

These units are split into two modules. The external heat pump module has a compressor, a cooling fan and an evaporator coil. The internal module consists of an air handler along with condenser coils and an air circulation fan. In summer, the system doubles as an air conditioner. These systems typically cost between $1,860 and $8,900 (CAD 2,577 and CAD 12,330), depending on their heating and cooling capacity. These estimates exclude installation costs.

Whole-Home Packaged Heat Pumps

A packaged heat pump combines the air handler and heat pump into one unit. These are installed externally on a concrete pad or the roof of a home. They're connected to interior air ducts and sometimes called ducted heat pumps. These units are more specialized, so their starting cost is slightly higher, with prices ranging from $3,160 to $7,140 (CAD 4,378 to CAD 9,892).

Ductless Mini Split Heat Pumps

A ductless mini split unit consists of an external condensing unit with an internal, wall-mounted air handler. The condensing unit may serve up to four air handlers, each dedicated to heating a specific room. These units are air source, drawing heat energy from the air. Prices start at $940 (CAD 1,302) for a single-room unit and go up to $13,340 (CAD 18,482) for a mini split heat pump with four air handlers.

Geothermal Heat Pumps

Geothermal heating uses the heat stored in the ground as an energy source. The heat pump draws heat energy via pipes filled with a water and antifreeze mixture that are buried in the ground below the frost line. At this depth, the soil temperature stays relatively constant between 40 and 70 degrees Fahrenheit (4 and 21 degrees Celsius). This higher temperature range increases the efficiency of a geothermal heat pump and improves winter performance compared to air source systems. Prices range from $5,980 to $16,560 (CAD 8,285 to CAD 22,943).

Water-Source Heat Pumps

A water source heat pump is similar to a geothermal unit except it draws heat energy from a nearby lake, pond or well. This simplifies installation as there's less excavation needed. The cost of a water source heat pump is about the same as for a geothermal unit.

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How Much Does It Cost to Install a Heat Pump?

Heat pump installation costs are approximately the same as for a comparable size of air conditioner. Installation by an HVAC technician is recommended, as they have the required tools and skills to install refrigerant systems. They also have the right equipment for adjusting the refrigerant charge and checking system pressures. While DIY installation is possible, you may void the manufacturer's warranty unless you can prove the installation was done correctly and conformed to local codes.

Whole-Home Heat Pump System Installation

A whole-home heat pump system has two components. The compressor unit is installed externally, generally on a small concrete pad. The air handler is installed indoors and connected to the home's ductwork. This unit is often placed in a home's basement or attic. The two units are connected by refrigerant pipes and electrical controls. The cost to install a whole-home heat pump ranges between $3,340 and $5,600 (CAD 4,627 and CAD 7,759). The total cost, including the purchase price of the equipment, is between $5,200 and $14,500 (CAD 7,204 and CAD 20,089).

Packaged Air Source Heat Pump Installation

A packaged system is an all-in-one unit, so it is already charged with refrigerant and has a built-in air handler. The unit requires a platform if it's roof mounted or a concrete pad if installed outside. The installer connects the air handler to the home's duct system using large ductwork. The installation cost of a packaged unit is slightly lower at $2,540 to $4,860 (CAD 3,519 to CAD 6,733). The total cost of a package air source heat pump installation, including equipment, is between $5,700 and $12,000 (CAD 7,897 and CAD 16,625).

Ductless Mini Split Heat Pump Installation

The installation cost for a ductless mini split heat pump depends on the number of rooms it serves and the number of air handlers included. The installation cost for a system with a single air handler is $1,960 (CAD 2,715). The total cost, including equipment, is $2,900 (CAD 4019). For a mini split system with four air handlers, expect to pay $4,460 (CAD 6,179) for installation. The cost of installation and equipment for this type of system is $17,800 (CAD 24,661).

Geothermal and Water Source Heat Pump Installation

The installation procedure and costs of geothermal and water source heat pump systems are similar, except for the placement of the heat collection pipes. Geothermal system pipes are laid in deep trenches dug in the ground, while water source heat collection pipes are placed in a nearby body of water such as a lake or pond. Installation costs for these systems range from $3,520 to $8,440 (CAD 4,877 to CAD 11,693), with total costs including equipment ranging from $9,500 to $25,000 (CAD 13,162 to CAD 34,636).

Are There Different Sizes of Heat Pumps and How Much Do They Cost?

Heat pumps are available in a range of sizes. Heat pump capacities are rated in tons and British thermal units per hour (BTU/hr). The size of the heat pump you need depends largely on the square footage of your home and, to a lesser extent, the climate zone you live in.

Heat Pump Sizing Based on House Square Footage

The following shows the recommended heat pump capacity and corresponding rating in BTU/hr based on the size of a home, as well as the average heat pump cost range for each size, including installation. (Based on data from HomeGuide.)

600–1,100 Square Feet

Size: 18,000 BTU per hour
Capacity: 1.5 Ton
Price: $2,000–$3,500 (CAD 2,771–CAD 4,849)

900–1,400 Square Feet

Size: 24,000 BTU per hour
Capacity: 2 Ton
Price: $3,000–$5,500 (CAD 4,156–CAD 7,620)

1,200–1,650 Square Feet

Size: 30,000 BTU per hour
Capacity: 2.5 Ton
Price: $3,200–$6,000 (CAD 4,433–CAD 8,313)

1,500–2,100 Square Feet

Size: 36,000 BTU per hour
Capacity: 3 Ton
Price: $3,500–$6,500 (CAD 4,849–CAD 9,005)

1,800–2,300 Square Feet

Size: 42,000 BTU per hour
Capacity: 3.5 Ton
Price: $3,800–$7,000 (CAD 5,265–CAD 9,698)

2,100–2,700 Square Feet

Size: 48,000 BTU per hour
Capacity: 4 Ton
Price: $4,000–$8,500 (CAD 5,542–CAD 11,776)

2,400–3,300 Square Feet

Size: 60,000 BTU per hour
Capacity: 5 Ton
Price: $4,500–$10,000 (CAD 6,235–CAD 13,855)

Other Cost Factors Involved in Heat Pump Installation

Other factors to consider when installing a heat pump system include expenses such as labor costs, ductwork, permits, electrical upgrades, removal of the old equipment and auxiliary heating requirements. The efficiency rating of the new equipment affects its price, so it's also a factor that impacts your total cost for installing a heat pump system.

Labor Costs

Labor charges represent a significant percentage of the overall cost of a heat pump installation. According to The Spruce, you can expect to pay an HVAC professional between $75 and $125 (CAD 104 and CAD 173) per hour to install a heat pump, depending on your location. While the above installation costs include labor charges, it's best to obtain a fixed-cost estimate for the work.

Ductwork Installation Costs

Depending on the condition of your home's old heating system, you may need to install new ductwork. While the cost of connecting to existing ducts is included in the above estimated installation costs, modifications, upgrades and repairs are extra. Repairing or replacing small sections of ductwork costs between $10 and $20 (CAD 14 and CAD 28) per linear foot, while the cost to completely replace old ductwork ranges from $500 to $2,000 (CAD 693 to CAD 2,771).

Permits

Before installing a new heat pump, you'll need to obtain the required permits from your municipal or city building department. Local ordinances vary, but expect the permit fees to be between $50 and $300 (CAD 69 and CAD 416). HVAC installers often handle obtaining necessary permits.

Electrical Upgrades

If you're replacing an older furnace or central air conditioner, your home's electrical panel may not be up to scratch. Before accepting a quote for heat pump installation, ask the installer to check your electrical panel to assess whether any changes are needed. For example, you may need to upgrade the electrical panel, which can cost between $500 and $4,000 (CAD 693 and CAD 5,542).

Removal of Old HVAC Equipment

If you need to remove an old air conditioner, air handler and/or furnace, it could cost between $500 and $1,200 (CAD 693 and CAD 1,663). You may be able to save money by using the existing air handler or keeping your current furnace as a backup. The installer can advise you on whether this is possible.

Auxiliary Heating Needs

Although a heat pump can provide heating even when the outdoor temperature dips, its output is lower than in milder weather. Depending on the typical winter temperatures in your locale, it may be worth talking to your HVAC professional about choosing a cold climate heat pump and/or a model equipped with an auxiliary heat source

Heat Pump Efficiency

Heat pump heating efficiency is measured using the heating seasonal performance factor 2 (HSPF2) rating. For split system heat pumps, the minimum efficiency allowed by the Department of Energy is 7.5 HSPF2. Heat pumps with an HSPF2 of 9 or more are considered high-efficiency models.

The seasonal energy efficiency rating 2 (SEER2) is a measure of a unit's cooling efficiency. The minimum SEER2 rating for air source split system heat pumps is 14.3 SEER2, and heat pumps with a SEER2 factor of 17 or higher are extremely efficient at cooling.

A higher efficiency rating means a unit uses less energy to produce the same amount of heating and cooling output, which can result in energy savings over the equipment's lifespan. More efficient models typically have higher prices, however, so the model you choose can impact the up-front cost of your heat pump installation.

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

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