New Heat Pump Cost: Central Heat Pump Installation Pricing

This buying guide will help you decide whether an air exchange heat pump is the right heating and cooling option for your home. Let’s start with the bottom line: heat pump unit prices and the cost of installation.

Trane 14 SEER Package Heat Pump Installed by American Cooling And Heating


If you are only replacing a heat pump but not the air handler, then your total cost can range between $6,500 and $12,500 for the new unit and its professional installation

Did you know? Air source heat pump split system includes a heat pump and an air handler or a gas furnace and an evaporator coil. Here are the potential equipment and installation costs to expect:

The national average cost to install a new air-source heat exchange pump and a new air handler can range between $10,500 and $18,500, depending on the size of your home, heat pump brand, type, and efficiency level, overall project complexity, and your home’s location.

  • 1 outdoor heat pump: $3,000 to $5,000
  • 4 indoor air handlers: $3,000 to $4,000
  • Professional installation: $3,000 to $5,000

Heat pump unit costs: Here are the three cost tiers based on efficiency and performance, factors explored in detail below:

  • Basic heat pumps: $1,750-$3,000
  • Better heat pumps: $2,000-$3,500
  • Best heat pumps: $3,250-$6,000

Air handler unit costs: Split system heat pumps are usually paired with an air handler, but many work with a gas furnace, too. Here are the current air handler costs in two basic grades:

  • Basic air handlers and coil: $750-$1,500
  • Better air handlers and coil: $1,000-$2,250

Professional Installation Costs:

Your total cost installed will depend on the size of the unit, since the larger it is, the more refrigerant is needed. The overall complexity of the installation and whether an air handler is also being installed will significantly impact the total cost.

  • Heat pump installation, no air handler: $1,500-$2,500
  • Heat pump and air handler installation: $2,500-$4,500

Pro Tip: Make sure your contractor gets a building permit from the local building department to install your new heat pump. The permit includes a mechanical inspection to ensure the unit is properly installed.

Did you know? Heat pumps cost far less to operate than gas furnaces because they are two to three times more efficient.

Air Sources Heat pumps (ASHPs) are rapidly gaining market share because of their proven efficiency advantage over gas and oil furnaces combined with central ac systems.

Modern high-efficiency air-source heat pump can deliver up to three times more heat energy to a home than the electrical energy it consumes. — This is possible because a heat pump absorbs and moves heat (both heating and cooling are delivered via forced air distribution) rather than converting it from fuel like combustion heating systems do.

In fact, the Northeast Energy Efficiency Partnerships found that ASHPs offer a legitimate space heating alternative in the Northeast and Mid-Atlantic regions; when the old heating units are completely replaced, the annual ASHPs savings are around 3,000kWh ($500 to $600) as compared to electric resistant heaters, and 6,200kWh (or $1,000+) as compared to oil systems.

When displacing oil (i.e. the oil system remains, but operates less frequently), the average annual savings are near 3,000 kWh or about $550.

While furnaces burn fossil fuel to create heat, heat pumps heat and cool interior spaces using electricity to circulate refrigerant.

When heating, the refrigerant captures heat outside and dumps it inside, and it does the opposite when cooling (heat pumps are air conditioners, too).

Yes, the electricity used to power a heat pump is often created by burning fossil fuel, but far less energy is required to produce the same amount of heat pump BTUs as furnace BTUs.

While you’ll pay more for a heat pump than you would for a gas furnace, the extra cost can be recouped through lower utility costs in 5-7 years.

Top 6 Reasons to Get a New Heat Pump

It’s possible you’re still considering your options, so here are the top 6 reasons to buy a new heat pump:

  • Repair costs to an existing heat pump are mounting (see Pro Tip below).
  • You’re not moving. The longer you plan to stay in your existing home, the more it makes sense to replace the heat pump rather than pay for even minor repairs. This is especially true if the new unit is significantly more efficient. You’ll start saving on energy costs from the first day of use.
  • Your current heat pump is running, but it’s getting older and has had repair issues. A preemptive decision to replace it before the next summer or winter can prevent you being without AC or heat when you need it most.
  • The old heat pump is losing efficiency with age – it costs more to run, even after having it cleaned and maintained.
  • You want improved energy efficiency and/or indoor comfort.
  • You’re building a home and deciding between a heat pump and a gas furnace.

Pro Tips: When repair costs of an old unit reach 50% of the cost of a new unit, it makes sense to put your money into a new heat pump. This is especially true if your heat pump is 10+ years old or you don’t plan to move soon. Even if you move, a newer heat pump will be more attractive to potential buyers than an old one with a history of repairs.

Also, beware of heat pump technicians that push repair of an older unit. This is a technique sometimes used by unscrupulous contractors. Their goal is to gain your trust, encourage you to pay for one or more repairs over the course of a few years and then sell you a new heat pump when it becomes clear that the old unit is too far gone to repair.

You’re better off skipping the repairs and buying the new heat pump you’re going to need soon anyway. If that sounds cynical, here’s what HVAC contractor and consultant Charlie Greer tells HVAC contractors (not homeowners!):

Repair vs. Replace scenarios are tricky, because, once you bring up the topic of replacing the customer’s equipment, you stand the risk of the customer deciding to get bids, meaning that you could wind up getting neither the repair nor the replacement sale.

In the long run, you make more money when they (homeowners) opt for the repair anyway. You get one repair now, possibly a few more down the road, then a higher price (due to inflation) when they ultimately replace it in the future.

Choosing Heat Pump Efficiency and Size

Once you’ve decided to buy a heat pump, there are two related issues to address: Efficiency and whether you want staged heating and cooling. Let’s talk about efficiency first.

Since heat pumps do both, heating and cooling, they have two related efficiency ratings:

  • SEER – Seasonal energy efficiency rating is the rating for air conditioning efficiency
  • HSPF – Heating seasonal performance rating is the rating for heating efficiency

For both ratings, the higher the number, the more efficient the model is. The current minimum efficiency ratings for heat pumps are 14 SEER and 8.2 HSPF. The most efficient heat pumps available have SEER ratings of more than 22 and HSPF ratings of about 13. A heat pump with a low SEER rating will normally have a low HSPF rating. An ASHP unit with a high SEER rating will normally have a high HSPF rating, too.

How efficient should your heat pump be?

If you are committed to the most environmentally friendly and energy-efficient heating and cooling possible, then buy the most efficient heat pump you can afford. Look for the EnergyStar label to get the most energy efficient heat pump.

If your goal is cost-effective heating and cooling that balances upfront cost with long-term operating cost, the principle is this:

Look for High SEER Rating in Warmer Climates

The warmer your climate is, the more efficient your heat pump’s SEER rating should be to ensure lower energy use in the years ahead.

Look for High HSPF Rating in Colder Climates

The colder your climate is, the more efficient your heat pump’s HSPF rating should be to ensure maximum efficiency and lower energy use in the years ahead.

Did you know?

“Cold Climate” rated Air Source Heat Pumps Can Provide Heat in Temperatures as low as -13 Fahrenheit.

Cold Climate Air Source Heat Pumps Can Provide Heat in Temperatures as low as -13 Fahrenheit

A dual fuel system vs. a gas furnace

In Zones 3, 4 and 5, freezing temperatures are common in winter.


Regular heat pumps (not high-efficiency ones) may have difficulty collecting heat in outside air that is too cold, so the efficiency and effectiveness are reduced.

In these climates, a gas furnace instead of a heat pump or a dual fuel heat pump (see below) may be a better choice than a system that heats with a heat pump and electric auxiliary heat in the air handler.

Electric heat – like a space heater or hair dryer – is very costly compared with standard heat pump heating or gas furnace heating.

Did you know?

Some heat pumps can share the heating load with a gas furnace. They’re called dual fuel heat pumps for this reason. The heat pump heats your home when temperature outside is in the mid-30s and above.

When it gets colder than that, data from an outdoor sensor causes the system to switch from heating with the heat pump to heating with the gas furnace. You don’t have to flip a switch on the thermostat or give any other input. When temperatures rise again, the system automatically returns to heat pump heating.

Dual fuel heat pump systems cost more than standard heat pump systems because a furnace costs $500-$800+ more than an air handler. However, a dual fuel HVAC system delivers lower energy use and cost because, as we’ve noted, a heat pump is more efficient than a gas furnace. The heat pump will provide about 70% of the heating in the coldest climates and up to 90%-plus where winters are warmer.

Size-wise: How big should your heat pump be?

Residential heat pumps are produced in these sizes:

  • 1.5 tons/18,000 BTUs
  • 2.0 tons/24,000 BTUs
  • 2.5 tons/32,000 BTUs
  • 3.0 tons /36,000 BTUs
  • 3.5 tons / 42,000 BTUs
  • 4.0 tons / 48,000 BTUs
  • 5.0 tons / 60,000 BTUs

The capacity needed to properly heat your home is determined by your climate and your home’s size and construction. As for climate, the same home in a hot climate like Phoenix or in a cold climate like Minneapolis needs a larger heat pump than in a temperate climate like San Diego where not as much cooling and heating is required.

As for home construction, it’s not just the size of your home that’s considered. An HVAC technician doing a load calculation will also consider your home’s layout, insulation levels, number and type of windows, roof type, landscape factors such as trees shading your home and more.

Pro Tip: If you’ve made your home more energy efficient since the last heat pump was installed by adding additional insulation, Energy Star windows, weather stripping, or solar panels, then your replacement heat pump should probably be smaller than the last one. That’s why a load calculation is so important. When the heat pump is too large for the home, bad things happen:

  • It wastes energy
  • It heats and cools past the thermostat set point, creating temperature swings
  • It runs short cycles, and in summer, short cycles don’t remove as much humidity, so your home might have that cool and humid “clammy” feeling

Insist on a load calculation if there is any question about the size heat pump that would deliver the best performance.

Staged Heating and Cooling: Pros and Cons

The purpose of staged heating and cooling is to boost performance and indoor comfort control. If you’re unfamiliar with the concept, here briefly are your options:

Single-stage units heat and cool at 100% capacity. They’re either off or fully on. Their SEER range is from 14 to 17. The pro is that they cost less. For example, a 16 SEER single-stage unit costs about 25% less than a 16 SEER 2-stage heat pump.

Two-stage heat pumps run at low capacity, which is 65% to 70%, to maintain even indoor temperatures. When you set the thermostat for more output or outdoor temperatures are changing rapidly, the unit will run at 100% capacity.

The upside is that low-capacity cycles are quieter and heat/cool more evenly, especially when supported by a variable-speed blower in the air handler. The downside is higher equipment and repair costs. Two-stage heat pumps include models with SEER ratings of 16 to 20.

Variable-capacity heat pumps adjust heating/cooling capacity in 1% increments between 40% and 100% based on the demand for heat or AC.

The pros include precisely balanced temperatures and maximum efficiency. They have ratings of 19 to 28 SEER.

The cons are the highest equipment and repair costs. Variable-capacity heat pumps should always be paired with a variable-capacity blower for optimal climate control.

What about communicating heat pumps?

There’s a performance modification to top-of-the-line HVAC equipment called communicating technology. Most top brands make communicating equipment, and it is proprietary to each.

For example, Trane’s ComfortLink II communicating thermostat won’t control a Goodman ComfortNet or Heil Observer communicating system. The lack of the universal compatibility that is available in non-communicating systems is a significant downside!

In a communicating system, each component such as a furnace, heat pump, AC or the blower motor, sends data to the thermostat control, and the control determines the exact level of heating or cooling and fan speed is needed. Here are other pros and cons:

  • Pros of communicating HVAC systems: They optimize efficiency and indoor comfort such as superior dehumidification in summer and balanced temperatures in all seasons.
  • Cons of communicating HVAC systems: The upgrade costs $800-$1,000+, but the enhanced efficiency and comfort control is small enough that most homeowners wouldn’t notice it. This is especially true since only top two-stage and variable-capacity systems that already deliver better performance are equipped with it. All the equipment, including the thermostat, must be communicating to receive the benefits. Some communicating equipment is known to stop communicating, and when that happens, diagnosing and solving the cause can be very difficult and costly.

If you appreciate premium performance, get the opinion of your HVAC contractor about its brand of communicating equipment. Some contractors are comfortable recommending the equipment; others refuse to install it because they fear they’ll soon be back trying to get it to function as it should. We’re hesitant to recommend it due to the downsides mentioned here.

Thermostat Compatibility

There are two areas of compatibility to be concerned about: Brand and performance.

  • Thermostat brand: Non-communicating systems work with any brand thermostat including popular smart thermostats like Ecobee, Nest, Honeywell Lyric and Lux Geo.
  • Thermostat performance: Your thermostat must support the features your heat pump might have such as two-stage heating or constant fan-on mode for better summer dehumidification. The thermostat packaging or its online product page should list the types of systems it supports.

Pro Tip: If you’re shopping for a smart thermostat and not sure what your HVAC system’s capabilities are, see the thermostat manufacturer’s compatibility checker. Take your thermostat cover off and select the boxes on the checker that correspond to the wiring terminals being used on your thermostat. Most, like this Lux checker, will tell you which of the brand’s models are compatible with your system.

Heat Pump Brands

Most heat pump brands are average in quality, and you can expect 15-17 years of reliable service when the unit is properly installed and maintained with cleaning and minor repairs. Some have better track records; others are worse.

Using independent studies and repair data from the last 5-7 years, we’ve compiled a three-tier list of heat pump brands:

Best brands:

  • Trane and American Standard (Ingersoll-Rand)
  • Carrier and Bryant (United Technologies)
  • Heil, Arcoaire, ComfortMaker, Keep Rite and Tempstar (International Comfort Products)

Average brands:

  • Lennox
  • Maytag, Broan, Westinghouse, Frigidaire and NuTone (Nortek Global)
  • Armstrong Air, AirEase, Concord and Ducane (Allied Air)
  • Goodman, Amana and Daikin (Daikin)
  • Rheem and Ruud (Paloma Industries)
  • Ameristar (An Ingersoll-Rand value brand)

Below-average brands:

  • York, Coleman and Luxaire (Johnson Controls)

Did you know? The best warranties in the industry are offered by Goodman, the brand that is often the most affordable, too.

For example, Goodman GSZC18 features a lifetime warranty on the compressor.

The industry average is 10 years for a brand’s top equipment. The International Comfort Products brands also have excellent warranties including a 10-year replacement warranty on the compressor and coil.

On models like the HCH6
Ion™ 16 Two-Stage Heat Pump
and on™ 18 Variable-Speed Heat Pump, if either fails in the first 10 years, the entire heat pump will be replaced.

The Nortek Global brands offer 12-year general warranties on top equipment.

Quality Installation is Essential

While brand matters, installation might be more critical to the durability of your heat pump system. Going cheap on installation can lead to higher repair costs and earlier replacement, if not done properly. That doesn’t mean the highest estimate is necessarily the best either. The key is to hire a qualified and experienced installer.

Pro Tip: N.A.T.E., the National Association of Technician Excellence, is an industry group that provides testing and certification to HVAC technicians. Hiring a N.A.T.E.-certified installer ensures a proven level of competency.

Pro Tip: We recommend requesting written estimates from three or more experienced air source heat pump contractors. When they know you are getting multiple estimates, they’ll provide the most competitive bids.

How to Buy a Heat Pump in Five Steps

Let’s condense the information here into a simple process for choosing a heat pump you’ll be satisfied with for many years:

  1. Consider the basics: What the approximate efficiency your heat pump should be and whether your winters are cold enough that a dual fuel system (heat pump and gas furnace) is something you’re willing to pay extra for.
  2. Request estimates from three or more heat pump contractors
  3. Review online ratings from the Better Business Bureau, Google Reviews, Yelp and similar for any contractor you’re considering using.
  4. Meet with contractors you’re considering. Determine whether they’re licensed and insured and learn about the experience and qualifications of the installers. Get recommendations for equipment brand, efficiency and size.
  5. Select the installer best qualified to install your heat pump.

This process can be streamlined by using our free, no-obligation service. You’ll receive estimates from some of the top heat pump installers in your area, and, of course, you’re welcome to research online ratings for each company, too. The contractors know they are competing on the price for the job and their reputation.

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