Gas Furnace vs Electric Heat Pump: Which is Best for Heating Your Home?

Written By Lester Mclaughlin
Updated On

Are you wondering what the best way to heat your home is? Should you install an electric heat pump or a gas furnace?

You’ve come to the right place!

In this Blue National HVAC guide, you’ll learn:

  • The top 7 differences between gas furnaces and electric heat pumps
  • The advantages and disadvantages of both
  • Which one is the most cost-effective
Gas Furnace vs Electric Heat Pump

And much more!

So, if you’re looking for answers on the best way to heat your home, keep reading our detailed guide below to get answers to all of your questions!

7 Differences Between Gas Furnace vs. Electric Heat Pump

Electric heat pumps and natural gas furnaces both provide home heating, but they have many critical differences. Gas furnaces burn natural gas to create heat and electric heat pumps use the vapor compression refrigeration cycle to provide heat to the home. 

Let’s dive into the major differences between the two!

How They Heat Your Home

The biggest difference between electric heat pumps and gas furnaces is how they generate the heat for your home. The processes couldn’t be more different. 

Electric Heat Pumps

Electric heat pumps work by extracting heat from the outside air and pumping it into the home. They accomplish heating through the vapor compression refrigeration cycle, which is the same process refrigerators and air conditioners use to provide cooling. 

However, when heat pumps are warming the home, they are working in the opposite direction of an air conditioner. In other words, they are pumping heat into the home instead of pumping the heat out. 

Electric heat pumps can come in many forms, with the two most common models being air-source heat pumps and ductless mini-split heat pumps. A water source and a geothermal heat pump are two more examples. 

However, for the sake of a more direct comparison, we’ll focus on electric air-source heat pumps since they are designed to heat the entire home just like gas furnaces. 

From the outside, air-source heat pumps look almost identical to a central air conditioning system. They both have indoor and outdoor units with cooling coils, compressors, and fans. However, air-source heat pumps have one critical component a central air conditioner does not: A reversing valve. 

The reversing valve allows the refrigerant to reverse direction in the vapor compression refrigeration cycle, allowing the electric heat pump to both heat the home in the winter and cool it in the summer! 

Yes, that’s right – an electric heat pump can cool and heat your home!

Here is how the vapor compression refrigeration cycle works and the major components involved. They are all connected in a closed-loop with refrigerant lines filled with refrigerant connecting the major components: 

  • Compressor – located inside the outdoor unit, it compresses the refrigerant, increasing its pressure and keeps the refrigerant moving through the loop
  • Condenser – the condensing coils are located in the indoor unit or air handler (when heating), and they are filled with the heated refrigerant, a blower motor moves air across the coils, and the refrigerant’s heat is transferred to the air, which is pumped throughout the home via the ductwork
  • Thermal expansion valve – once the refrigerant passes through the condenser coils and loses its heat to the air, it travels back to the thermal expansion valve, where its pressure is reduced. Due to the sudden pressure drop, the refrigerant rapidly cools. 
  • Evaporator – with the refrigerant now at a lower temperature, it can absorb heat from the outside air due to the latent heat of vaporization property. Because of this property, the refrigerant can extract heat from the outside air even at cold temperatures

Gas Furnaces

Natural gas furnaces provide heat by combusting natural gas or propane in a burner. The fire in the burner heats a heat exchanger, which is located directly above it. The furnace’s blower motor then blows air across the heat exchanger, and the heat from it is transferred to the air before it is distributed to the home through the ductwork. 

The excess combustion gas and carbon monoxide created by the burning of the natural gas is exhausted through a flue, a chimney-type pipe. The flue either exits the home on the side or roof, depending on the type of furnace. 

Complex, high-efficiency gas furnaces have secondary heat exchangers that collect excess heat lost through the flue of simpler systems.

Once the hot air is pumped into every room of your house through the supply vents, it rises to the ceiling and forces the colder air through the return vents. The heating cycle then repeats until the temperature setpoint on the thermostat is reached. 

Compared to electric furnaces, gas heat is more efficient and costs less. 

Costs

Electric heat pumps tend to have higher repair costs than furnaces – heat pumps average $300 and furnaces $250 per repair. 

In terms of equipment costs, electric heat pumps tend to run at higher prices than gas furnaces. The main reason for their higher price is due to having more physical components (an indoor and an outdoor unit with a compressor) as well as more expensive and complicated internal components. 

Homeowners interested in purchasing a new electric heat pump or gas furnace can expect to pay the following:

ItemGas FurnaceElectric Heat Pump
Average Unit Cost$700 to $1,000$800 to $3,000
Average Installation Cost$1,700 to $2,500$3,500 to $7,000

On average, electric heat pumps have a higher unit cost and installation cost. So what gives? Why would anyone spend so much extra money to get an electric heat pump over a furnace?

Well, heat pumps provide a dual function – they heat and cool your home. Therefore, a more accurate cost comparison would be a gas furnace cost plus the price of a central air conditioner against an electric heat pump. 

For example, if you purchase a furnace and want cooling in the summer, you’ll also have to buy a central air conditioner which costs $3,000 to $5,000 for system and installation. However, after considering the added cost of a central AC unit, the cost comparison becomes closer. 

Installation

Electric heat pumps and gas furnaces both have complex and challenging installation processes, which should always be completed by a professional. 


Electric heat pumps have more components to install – the indoor unit, outdoor unit, and the refrigerant lines that connect them. Compared to a gas furnace, which only has a single indoor unit to install, heat pumps have a more complicated installation for this reason. 

Local Climate

The home’s local climate plays a significant role in the comparison between electric heat pumps and gas furnaces. In other words, gas furnaces and electric heat pumps work the best in different climate zones.

In mild climates, electric heat pumps can achieve close to 100% efficiency in heating mode and can be used as an AC unit in the summer months too. 

Gas furnaces, on the other hand, have incredibly high efficiencies too. They can achieve close to a 99% AFUE rating by using an advanced design that includes a modulating gas valve, a primary and secondary heat exchanger, and a variable-speed blower. 

Because gas furnaces create heat by burning natural gas, they have far better efficiencies at lower temperatures than electric heat pumps. 

Size

Since gas furnaces and electric heat pumps vastly differ in their designs, they have very different physical footprints as well. But, overall, gas furnaces take up about the same amount of indoor space as an electric heat pump. 

Electric heat pumps have outdoor units, and gas furnaces do not. Therefore, gas furnaces take up less overall space on the homeowner’s property. 

However, if a gas furnace is paired with a central air conditioning system, they take up slightly more floor space than electric heat pumps. 

Safety

By nature of design, electric heat pumps are the safer of the two options. They do not use combustible natural gas to create heat like gas furnaces. Therefore, they don’t have a risk of gas leaks, fires, and carbon monoxide leaks

However, electric heat pumps do have safety concerns as well. For example, refrigerant leaks can cause health issues through prolonged exposure. 

Energy Efficiency

For years, many HVAC manufacturers have been racing to design the most energy efficient heating systems. As a result, both electric heat pumps and gas furnaces have many high-efficiency models available from various manufacturers. 

  • Gas furnaces
  • From 80% up to 99% Annual Fuel Utilization Efficiency (AFUE)
  • Electric heat pump
    • Up to 100% AFUE in moderate climates (for heating mode)
    • 13 to 21 Seasonal Energy Efficiency Ratio (SEER) (for cooling mode) 

Therefore, the energy costs for gas furnaces tend to be less in the northern US, while energy costs for electric heat pumps are less in the southern US. 

What Are The Advantages and Disadvantages of Gas Furnaces?

Gas furnaces work by burning natural gas to create heat. Since they directly burn a fuel source to warm your home, they work better in frigid winter climates with an average outside temperature lower than 30°F. 

Here are the pro and cons of gas furnaces: 

Gas Furnaces
AdvantageDisadvantage 
Heats better in freezing climates, large BTU capacityOnly provides heating (and not cooling too)
Often less complex repairs and maintenanceBigger indoor footprint
In some climates, an AC unit may be unnecessary Louder than a heat pump
Less energy bills in frigid weatherDirectly uses fossil fuels
High energy efficiencyCarbon monoxide and gas leak risks

What Are The Advantages and Disadvantages of Electric Heat Pumps?

In contrast to gas furnaces, electric heat pumps work by using the vapor-compression refrigeration cycle to extract heat from the outside air. As such, they don’t work as well as gas furnaces in temperatures lower than 30°F because there is not a lot of heat in the outside air. 

Therefore, electric heat pumps are great options for climates that have mild winters and warmer summer months. 

Here are the advantages and disadvantages of heat pumps: 

Heat Pumps
AdvantageDisadvantage 
Great for climates with winter temperatures above 30°FRisk of refrigerant leaks
Smaller indoor footprint than a furnaceMay require supplemental electric backup heat in cold spells
Provides both heat and cooling Used all year for heating and cooling, leading to more frequent maintenance 
Ductless mini-split systems don’t require ductsMaintenance is more complex and expensive
Great energy efficiencies Loud outdoor unit
Zero risks of gas and carbon monoxide leaksHigher energy bills when it’s very cold or scorching outside

Which is Most Cost-Effective – Electric Heat Pump vs Gas Furnace?

There are many considerations to take into account when determining if an electric heat pump or a gas furnace is more cost-effective for you. 

Here are some things you should take into account when comparing the two: 

  • Upfront system cost – This is the price you pay for the electric heat pump or gas furnace, with heat pumps being the more expensive option
  • Installation cost – This is the price it costs to hire an HVAC contractor to install the system; heat pumps again have the higher cost
  • Heating costs – In very cold climates, furnaces have lower monthly heating pumps, and in temperate climates, heat pumps have the lesser cost
  • Repair and maintenance costs – Heat pumps tend to have a slightly more expensive repair cost
  • Additional component costs – If you have a gas furnace, you might need to purchase an air conditioning system to stay cool in the summer; similarly, if your heat pump can’t keep your house warm enough in the winter, you might need to purchase supplemental electric heaters
  • Lifespan – gas furnaces tend to have longer lifespans since they are only used during the cold months

As you can see, the cost-effectiveness depends greatly on the specific situation. In general, heat pumps are more cost-effective for warm/mild climates, and furnaces are better for cold climates. 

Which Option is Best for My Climate?


Gas furnaces and electric heat pumps are the most common residential heating systems in the United States. However, they are each tailored to different parts of the country, based on the climate zone. 

Cold Climates 

The Northern U.S. and Canada experience harsh winters, with temperatures often getting below 0°F. In these conditions, gas furnaces are the best option. They can effectively and efficiently heat your home by burning more gas to keep up with the high heating needs. 

On the other hand, an electric heat pump, an eclectic heat pump, would struggle to keep up with heating demands in very cold climates. The reason is that they work by extracting heat from the outside air, and cold air at 0°F doesn’t have much!

Electric heat pumps are so uncommon in the Northern U.S. and Canada that many homeowners have never heard of them!

Hot and Mild Climates

Electric heat pumps are best for hot and mild climates that experience very mild winters. By mild winters, we mean average temperatures above 30°F. 

Electric heat pumps are super-efficient at heating during these mild winter climates and have the added benefit of cooling the home in the summer too! 

Any Heating System Should Be Professionally Installed

Installations of electric heat pumps and gas furnaces are no amateur DIY projects. Instead, they require experience, skills, and the proper tools to install correctly. In fact, installing a furnace or heat pump can be dangerous, too, if you’re untrained.

If an unsecured connection is made to the gas line in a furnace installation, that can lead to a gas leak. Similarly, improper refrigerant line connections can lead to refrigerant leaks in an electric heat pump system. Both can cause serious bodily harm and damage to the home. 

Therefore, if you need a new HVAC system installed, leave it to the professionals. For gas furnace and electric heat pump installation, give our team of experienced HVAC technicians a call today!

Meet Your HVAC Expert

Lester Mclaughlin

HVAC systems are highly technical and often is the most misunderstood part of the house. From ductwork to heat pumps, I've been exposed to all sorts of issues facing homeowners. It really irks me when a homeowner is given bad advice like refilling freon vs fixing a leak in the system. I'm here to help our website readers with their heating and a/c problems.
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