Propane Furnace vs. 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 a propane furnace or a heat pump?

You’ve come to the right place!

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

  • The top 6 differences between propane furnaces and heat pumps 
  • The advantages and disadvantages of both
  • Which one is the most cost-effective and best for your climate
Propane Furnace vs 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!

6 Differences Between Propane Furnace vs Heat Pump

There are quite a few key differences between propane furnaces and heat pumps.

Let’s dive into the distinctions between them and how they work below.

How They Work

Although heat pumps and propane furnaces both provide heat to homes, their energy sources and how they do so is vastly different. 

Propane Furnaces 

Propane furnaces provide heat by combusting propane in a gas burner. Unlike a natural gas furnace, a propane supply must be stored on the property –- often a large propane tank. The combustion of propane in the burner heats the heat exchanger located directly above it. 

The furnace’s blower motor moves cool air across the heat exchanger, and its heat is transferred to the air to warm it up, warming it. The warm air then travels through the ductwork to multiple rooms in the home. As the warm air leaves the supply vents, it rises and forces the cooler air through the return vents. 

The cool air is sucked through the ductwork and through the heat exchanger to be warmed. This heating loop will continue until the temperature setpoint on the thermostat is reached. 

Just like your gas-powered car creates exhaust, a propane furnace does too. The exhaust from the combusted propane (which contains the dangerous carbon monoxide) is vented through a flue. The flue is a chimney-like pipe that allows air to exits the roof of the home. 

There are also high-efficiency propane furnaces that work a little bit differently. They have the same components as explained above but also include a secondary heat exchanger that recovers even more heat from the combustion gas that’s exhausted. 

Compared to electric furnaces, propane units are more efficient and perform at similar efficiency levels to natural gas units. 

Heat Pumps

Heat pumps function in a completely different way than propane furnaces. Compared to propane furnaces, heat pumps couldn’t be more different. 

First off, they don’t combust any fuel to create heat. Instead, they use the vapor compression refrigeration cycle to remove heat from the outside air and pump it into your home. 

The vapor compression refrigeration cycle is the same process that air conditioners use to remove heat from your home. However, heat pumps do the process in reverse of air conditioners. Plus, they can reverse the process at any time and provide heating or cooling based on the thermostat’s setting.

Heat pumps come in many stylesflavors;, here are the four most common types: 

  • Water-source heat pumps
  • Geothermal heat pumps (also known as ground source heat pumps)
  • Ductless mini-split heat pumps 
  • Air-source heat pumps 

For the sake of a more direct comparison, we focus on comparing air-source heat pumps to propane furnaces since they are both ducted systems. 

To homeowners that don’t know any better, an air source heat pump looks identical to a central air conditioner. It has an indoor and outdoor unit that contains all the same mechanisms: coils, compressor, fans, blower, thermal expansion valve, and more. 


One key component that heat pumps have (and air conditioners lack) is a reversing valve. The reversing valve reverses the flow direction of the refrigerant and is responsible for switching between cooling mode in the summer months and heating mode in the winter. 

Here’s a brief step-by-step highlight of how heat pumps work. All of the major components listed are connected together in a closed-loop (circle) with refrigerant lines which are filled with refrigerant at varying pressure and temperature: 

  • Compressor – located in the outside unit, it increases the pressure of the refrigerant and pumps it through the loop
  • Condenser – these coils are inside the indoor unit or air handler (in heating mode), they contain warm refrigerant, and a blower moves cooler air across its coils; the heat of the refrigerant is transferred to the air, which is blown to the home’s rooms via the ducts
  • Thermal expansion valve – after the refrigerant goes through the condenser coils and transfers its heat to the air, it flows back to the thermal expansion valve where it expands, and its pressure is reduced. Through this pressure drop, it cools rapidly. 
  • Evaporator – the now cooler refrigerant travels to the evaporator coils, absorbing heat from the outside air. Due to the latent heat of vaporization property, the cool refrigerant can even extract heat from cold outside air (yes, even “cold’ air still contains heat unless it is at “absolute zero,” which is -459.7°F).


Although heat pumps run on electricity to heat your home, they should not be confused with electric heating. Electric heating refers to a process that directly warms a heat exchanger through electric resistance.

Installation 

The installation of a heat pump system and propane furnace is very different.

Air-source heat pumps are installed similarly to central air conditioners. The indoor unit is installed in the basement, attic, garage, or utility closet. Then, the outdoor unit is installed on a concrete block just outside the home. 

The outdoor unit and indoor unit are connected together with the refrigerant lines before the system is charged with refrigerant. Lastly, they are wired up to power and tested to verify proper operation. 

Propane furnaces are also installed in either the basement, attic, garage or utility closet. However, there is no “outdoor unit” to install. Therefore, the installation is generally faster. A propane furnace has to be connected to the propane tank on the propane via a gas line. 


If there is no existing line running from the tank to the furnace location, that will add an additional step in the installation process to get gas heat to your home. 

Size 

The size of a propane furnace and heat pump system is slightly different. As for the space inside your home, the indoor unit of a heat pump takes up about the same amount of floor space as a propane furnace (usually slightly less).

Since heat pumps have an outdoor unit, they take up more space than propane furnaces that do not have one. However, you might consider the outdoor propane tank as a “component” of the propane furnace (even though it is the fuel source for water heaters and ovens too). 

After all, you need propane for it to work. In that case, depending on the size of your propane tank, it will likely take up more room than the outdoor unit of a heat pump.

Efficiency

Year after year, manufacturers of heat pumps and propane furnaces continue to improve the efficiencies of their units. Since both heating systems have been around for many decades, you can find high-efficiency models of both on the marketplace. 

Here is how they compare: 

  • Heat pumps
    • 13 to 21 Seasonal Energy Efficiency Ratio (SEER) for cooling mode
    • Nearly 100% AFUE in mild climates for heating mode, however efficiency decrease substantially as temperatures dip lower than 30°F 
  • Propane furnaces
  • The lowest is 80%, and the highest is 97.5% Annual Fuel Utilization Efficiency (AFUE)

If you’re replacing an old furnace or heat pump, either heating system will provide immediate energy savings. 

Safety

Since propane furnaces combust propane, they are inherently more dangerous. The propane not only poses a risk of fire, but improper venting can lead to carbon monoxide buildup in the home as well. 

With that being said, manufacturers have strict safety standards around their designs. Additionally, routine maintenance will help prevent catastrophic and dangerous failures. 

Heat pumps have safety concerns as well. They can short out electrically, which can lead to fires too (albeit very rare). Additionally, they can leak refrigerant into the home, which, if inhaled, can lead to health complications. 

Costs

Air-source heat pumps tend to have higher repair costs than propane furnaces on average. Additionally, air-source heat pumps are again the more expensive option in terms of the upfront unit and installation costs. 

There’s a reason air-source heat pumps are more expensive; they have more component pieces than a propane furnace. Recall, a heat pump has both an indoor and outdoor unit which leads to the higher cost. However, heat pumps can heat and cool your home so that that extra upfront cost could be worth it. 

Homeowners that purchase a new air-source heat pump or propane furnace can expect to pay the following:

ItemPropane FurnaceAir-Source Heat Pump
Average Unit Cost$800 to $2,100$800 to $3,000
Average Installation Cost$1,700 to $4,500$3,500 to $7,000

As you compare the costs in the above table, you will notice that heat pumps have both a higher installation and equipment cost. Be sure to keep in mind that heat pumps heat and cool your home, which provides a lot of value. 

If you were to purchase a propane furnace and wanted a cooling system in the winter, you’d have to buy a central air conditioning system to have comparable performance to an air-source heat pump. 

On average, a central air conditioner costs between $3,000 to $5,000 for the equipment and installation. Therefore, if you consider a central AC unit’s added cost, the cost comparison changes significantly. 

Heating costs are generally much higher for heat pumps. This is because they run on electricity which has a higher price than propane per heating unit (BTUs). The operating cost of each varies by region, but you can expect heat pumps to be 5 to 25% higher costs than propane furnaces. 

What Are The Advantages and Disadvantages of Propane Furnaces?

Propane furnaces burn fuel to heat your home. Since the combustion of propane is a highly efficient way to keep your home toasty, they work best in colder climates. 

Here are the pros and cons of propane furnaces:

Propane Furnaces
AdvantageDisadvantage 
More energy efficient at heating in cold climates (below 30°F)Only heats (and doesn’t too)
Easier maintenance and repairs than heat pumpsBigger indoor footprint
Pairing with an AC unit could be unnecessary in some climates Creates more noise than a heat pump
Less energy bills in cold weatherDirectly burns fossil fuels but with low emissions
Exceptional energy efficiency Risk of carbon monoxide poisoning and gas leaks
Lower upfront cost than a heat pumpRequires a large propane tank on the property that needs refilling and a delivery service

What Are The Advantages and Disadvantages of Heat Pumps?

Compared to a propane furnace system, heat pumps use an entirely different heating method- the vapor-compression refrigeration cycle. 

They remove heat from the outside air and pump it into your home. Therefore, they are not as efficient at heating as propane furnaces in colder climates with average winter temperatures of less than 30°F. Like propane furnaces, they have a great lifespan. 

Here are the key advantages and disadvantages of heat pumps: 

Heat Pumps
AdvantageDisadvantage 
Highly efficient in climates above 30°FRefrigerant leaks risks
Takes up less indoor space than a propane furnaceDuring record cold days or sudden temperature drops, supplemental heating might be necessary 
Heats and cools your homeMore frequent maintenance since they’re used all year for cooling and heating 
Absolutely no risk of gas and carbon monoxide leaksComplex repairs and maintenance 
Fantastic efficiencies Large energy bills during very hot and very cold days or months
Mini-split systems don’t need ductworkRequires an outdoor unit that can be loud

Which is Most Cost-Effective – Propane Furnace or an Electric Heat Pump?

Those interested in a new heating system often wonder if propane furnaces or heat pumps are more cost-effective, and rightly so. Like most people, they want to make sure they are getting the best value for the money. 

However, the answer is not the same for everyone. Determining which is the most cost-effective for you depends on many factors. Your local climate, how often you use the heat, the local electricity rate, the local cost of propane, and the efficiency and upfront cost of the specific propane furnace and heat pump all contribute to the total cost of ownership. 


However, in general terms, the cost-effectiveness of each system can be mainly attributed to your geographical region and climate. 

Which Option is Best for My Climate?

Propane furnaces and heat pumps are both common ways to heat homes in the U.S. However, they are primarily used in different regions, depending on climate. 

Cold Climates

If you’re from the Northern U.S., you understand that harsh, frigid winters are the norm. Temperatures often get below 0°F. In this climate, propane furnaces are the best choice. They can keep up with high heating demandspends and efficiently heat your home without breaking your bank. 

In the cold, northern climate, air-source heat pumps would not be able to keep up with the heating demands and would run your heating bill up to unexpected figures. 

Heat pumps don’t work so well in freezing weather. When installed in locations that experience just a few weeks of the icy northern climate, supplemental heaters (such as baseboard heaters) are almost always necessary to support heat pumps.

For regions such as the northwest U.S., furnaces are common, and the summers are so mild most residents don’t even need an air conditioner. 

In fact, heat pumps are so uncommon in the Northern U.S. many residents haven’t even heard of them! 

Mild and Hot Climates

Regions with mild and warm climates, like the Southern U.S., most often use heat pumps as their heating and cooling HVAC system. The heat pump can be used in both the cooling and heating season. If the average winter outside temperature is 40°F and higher, you can benefit from installing an air-source heat pump in your home.

Any Heating System Should Be Professionally Installed

Installing a heating system can be a tricky business. There are many different steps, considerations, and things that you can do wrong. It’s essential to get it right the first time. 

Some homeowners make the mistake of choosing a DIY approach which can seem like a cost-saving measure, but it could end up costing you more money in the long run. 

Hiring an industry professional to install your propane furnace or electric heat pump will ensure your new system works correctly and needs few maintenance visits in the future. 

To talk with one of our experienced HVAC technicians about your new installation and home heating needs, give us a call at Blue National HVAC 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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