Heat pumps typically have a higher price tag than some traditional heating and cooling systems, but installing this energy-efficient alternative can save you hundreds or thousands of dollars on your energy bill.
Jessica is a freelance writer, professional researcher, and mother of two rambunctious little boys. She specializes in personal finance, women and money, and financial literacy. Jessica is fascinated by the psychology of money and what drives people to make important financial decisions. She holds a Masters of Science degree in Cognitive Research Psychology.
Jessica has been a contributor at Insurify since July 2023.
Background working with banks and insurance companies
Sarah enjoys helping people find smarter ways to spend their money. She covers auto financing, banking, credit cards, credit health, insurance, and personal loans.
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The average cost of a new heat pump is $6,070. But depending on factors like the size of your home and the type and size of the heat pump system you buy, prices can range from $4,200–$7,900.[1]
Heat pumps often come with a hefty up-front price tag, but installing this energy-efficient alternative can potentially save you hundreds or even thousands of dollars on your energy bill. Learn how heat pumps work and why more homeowners are purchasing heat pumps over furnaces and air conditioners.[2]
How heat pumps work
A heat pump is an energy-efficient heating and cooling system that works by transferring heat rather than generating heat. Similar to how your fridge works, a heat pump system transfers heat from a cool space to a warm space. This makes the cool space cooler and the warm space warmer.
When you want to cool your house down in the summer, a heat pump moves warm air from your house to the outdoors. In the cooler months, a heat pump moves heat from the outdoors into your home to keep it warm.[3]
Heat pumps offer an energy-efficient alternative to a furnace and air conditioner that can benefit people in any state. While households using oil, propane, or older electronic equipment are likely to save the most by switching to a heat pump system, homes using natural gas for heating can also benefit.
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Heat pump alternatives
Heat pumps can affect the environment due to the use of refrigerant gases, but they tend to have a lower environmental impact than traditional heating systems and cooling systems.[4] And heat pumps often reduce carbon dioxide emissions by 38%–53% over a gas furnace and have the added benefit of replacing two appliances.
Rather than needing a furnace or boiler to heat your home and an air conditioner to cool it down, a heat pump can replace both. A heat pump is also safer than using a gas furnace.
Good to Know
Up-front heat pump installation costs are one of the only negatives. Heat pump systems typically have a higher price tag than a traditional furnace, but you can apply for tax rebates to lower the cost. For example, the Energy Efficient Home Improvement Credit provides up to $2,000 per year for pumps with a thermal efficiency rating of at least 75%.[5]
Heat pump maintenance costs
Heat pumps have an average life span of 12–20 years. But your pump may need some repairs during its lifetime. An average heat pump repair costs $405 and can range from $160–$650, depending on the part that requires repair or replacement.
The following table provides costs for some common heat pump repairs.[6]
Repair Type
Cost
Thermostat repairs
$100–$300
Heat pump won’t turn on
$150–$400
Heat pump won’t defrost
$90–$650
Condenser replacement
$300–$5,000
Ductwork repairs
$200–$2,000
Main factors affecting the cost of heat pumps
The average cost of a new heat pump is $6,070. Some of the main factors that affect the cost of buying and installing a new heat pump include the type of heat pump system you choose, its energy efficiency, the size and capacity of the pump, labor costs, and the climate where you live. Here’s a closer look at how each of these variables affects the overall cost.
Type of heat pump
Some types of heat pumps function in slightly different ways and often have vastly different price tags. The cheapest option is typically the ductless mini-split heat pump, which ranges from $1,300–$8,000, while the most expensive option is a solar energy heat pump, which ranges from $18,000–$39,000. The pump brand and the model can also influence the price.
Heat Pump Type
Description
Effect on Cost
Ducted air-source systems
This is the most common type of heat pump. It transfers heat between your house and the outdoor air.
This is typically the second-cheapest option, after the mini-split. It reduces electricity use for heating by approximately 65%.
Ductless air-source (mini-split)
This is a good option for homes without an existing duct system. It generates hot and cold water instead of air, and you can use it with radiant floor heating systems.
This is typically the cheapest type of heat pump to install.
Geothermal
This transfers heat between your house and the ground or a water source.
This is typically the most expensive option due to the large cost of heat pump installation. It can cost several times more to install than an air-source system of the same capacity, but it has lower operating costs. It can reduce energy use by 70%–80%.
Absorption
This uses heat or thermal energy and is also known as a “gas-fired heat pump.” It can use natural gas, steam, solar-heated water, air, or geothermal-heated water as a heat source.
This type of pump is complex and requires larger units compared to compression heat pumps. Solar heat pumps are generally more expensive to install than other options.
Energy efficiency
More energy-efficient heat pumps use less energy to heat and cool your home. When buying a heat pump unit, it’s important to consider two main efficiency metrics: seasonal energy efficiency ratio (SEER) and heating seasonal performance factor (HSPF).
Generally, heat pumps with higher SEER /SEER2 (cooling efficiency) and HSPF/HSPF2 (heating efficiency) cost more to install. But they’ll often pay for themselves thanks to lower energy costs. Pumps with higher efficiency ratings might also garner better tax incentives or rebates versus less efficient models.
People living in warmer climates should pay attention to the SEER. Homeowners in cold climates should look for a higher HSPF rating.
Size and capacity
Finding the right size heat pump for your space can help you save more on energy and increase the life expectancy of your pump. Heat pumps that are bigger and have higher capacity tend to cost more than those that are smaller and have lower capacity.
As a rule of thumb, you’ll need one ton of air conditioning capacity for every 500 square feet of your home. So bigger homes with more square footage will require a larger pump and cost more money. For instance, if you have a 2,000-square-foot home, you’ll need a pump with four tons of capacity. A 3,000-square-foot home will require six tons.[7]
Reach out to a local heat pump professional if you need help figuring out the size of the unit that’s right for your home.
Labor costs
Labor costs vary between pumps, as some are harder to install than others. Important factors that affect the cost of labor include:
Ductwork: Heat pumps that are simple and easy to install, like the ductless mini-split, generally cost less. But heat pumps that require ductwork installation often take more effort and come with a higher cost.
Expertise: The cost of labor for certain types of heat pumps, like geothermal systems, is generally higher because installation is more complex. These pumps have to be buried at least four feet underground and require a higher level of skilled labor.
Time: How long it takes to install the unit can also affect the cost. On average, heat pump installers charge $75–$125 per hour.
Location and climate
Different types of heat pumps are better suited for warm or cool climates. A basic model is likely adequate if you live in a warm region. But if you live in a location with cold temperatures, you’ll need to look for a heat pump that’s rated to withstand your region’s coldest nights.
In general, geothermal heat pump systems perform better in more extreme climates than air-source heat pump systems. You can find cold-climate heat pumps that can work down to 5°F. But these heat pumps typically come at a premium cost.
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Tips for saving money on heating costs
The cost of heating your home typically accounts for 29% of your utility bill.[8] If you’re looking for ways to save on your heating costs, consider the following tips:
Switch to a heat pump
Consider installing a heat pump to save on heating costs over oil, propane, electric heat, or natural gas.
Maintain existing heating equipment
If you have a furnace, clean and replace the filters as recommended. Perform regular maintenance on baseboard heaters, warm air registers, and radiators.
Use window coverings
Close curtains or window shades to keep heat in and drafts out, and consider thicker material for extra coverage. Keep window coverings open on south-facing windows during the day to let the sun and warmth in.
Turn the heat down
Adjust your thermostat down a few notches, and consider wearing a warm sweater and slippers to reduce your heating bill.
Get an energy assessment
A home energy assessment provides an overview of how much heat energy your home uses and any inefficiencies. You can perform a DIY home assessment or have a professional do a room-by-room exam to look for inefficiencies and recommend solutions.
Heat pump costs FAQs
If you’re still wondering if a heat pump is right for you, this additional information could help you decide.
What is the average cost of a heat pump system?
The average cost of a heat pump system is $6,070. But systems can range from $4,200–$7,900 depending on factors like the size of your home and the type of pump you buy.
What are the downsides of buying a heat pump?
The up-front cost of buying a heat pump can be high compared to traditional heating and cooling systems. But homeowners may be eligible for tax credits, such as the Energy Efficient Home Improvement Credit, the Residential Clean Energy Credit, or the Home Electrification and Appliance Rebate (HEAR) Program.[9]
Are heat pumps worth it?
A heat pump can be worth it if you want to save on heating and cooling costs and lower your environmental impact. Consider the location, the size of your home, and your budget before choosing a heat pump.
How much is a heat pump for a 2,500-square-foot house?
The average cost of a heat pump for a 2,500-square-foot house ranges from $3,900–$6,400.
Do heat pumps actually save you money?
Probably. With the right heat pump, it’s possible to save on your energy bill. Energy savings are typically highest for homes currently heating with propane, heating oil, or older electrical equipment. But homeowners using natural gas can also save by switching to a heat pump.
Jessica is a freelance writer, professional researcher, and mother of two rambunctious little boys. She specializes in personal finance, women and money, and financial literacy. Jessica is fascinated by the psychology of money and what drives people to make important financial decisions. She holds a Masters of Science degree in Cognitive Research Psychology.
Jessica has been a contributor at Insurify since July 2023.
Background working with banks and insurance companies
Sarah enjoys helping people find smarter ways to spend their money. She covers auto financing, banking, credit cards, credit health, insurance, and personal loans.
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