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HVAC Education, Buying Tips, Furnaces, Technology

Cost to Replace an Oil Furnace

If you live in the northern or northeastern part of the U.S., there’s a possibility that your trusty old heating system is an oil furnace. And if it is, you are among the many who understand its benefits – warm, comfortable heating during the coldest days of winter. But as reliable and comfortable as they are, oil furnaces don’t last forever. Eventually you will need to replace your furnace – or at least start researching the cost of oil furnace replacement.

Often, the signs and symptoms are obvious – like the day it quits working. Other times, the signs might not be so clear. Maybe it’s taking a little longer to heat your home, or it just keeps running and can’t seem to keep up. Perhaps your heating bills keep getting higher for no apparent reason. Or maybe it’s making some new and different sounds when it’s running.

If you are starting to notice any of these symptoms, or if your furnace is 15 years old or more, it’s probably a good idea to investigate oil furnace costs. Keep in mind that total costs will include more than the price of the furnace itself. You'll also need to budget for labor and materials required for the job.

Of course, the cost to replace oil furnaces can vary quite a bit depending on your climate, the efficiency and quality of the furnace, and more. For example, the average pricing could land between $2,500 on the low end to $10,000 on the high end2. That’s quite a difference! That’s why contacting a qualified local HVAC professional can be a big help. As you consider your options, keep in mind that Carrier oil furnaces are some of the best in the business, backed by the most trusted name in comfort.

A Carrier dealer discusses the cost to replace an oil furnace with homeowners in their kitchen.

Breakdown of Oil Furnace Replacement Costs

As previously described, there are a wide range of factors that can affect oil furnace replacement costs. The two most obvious are the cost of the furnace itself and the installation costs for your HVAC contractor. A third component that might not come to mind is removal and disposal of the old unit.

The cost of the furnace – Oil furnace pricing can vary between around $3,500 on the low end and up to around $9,1751 or more on the high end. A basic furnace that meets the Department of Energy’s minimum efficiency standard will cost less than a higher efficiency model with comfort-enhancing features built in.

Installation costs – Rates can differ from area to area, and each home can have unique needs to make installation easier or more complex. The average labor cost to install a new oil furnace can range from around $1000 to $3000.2

Old furnace removal – Some contractors may include this in their labor costs, while others may include a line item for removal and disposal of the old unit. Either way, those costs can range anywhere from $250 on the low end to $645 on the high end.1

As you can see, the cost to replace an oil furnace can add up. That’s why it’s always a good idea to monitor the health of your system, and if you are having issues, contact a Carrier dealer in your area for a system assessment. Your local Carrier dealer can help answer the question of should you replace your oil furnace or repair your current one.

Factors That Affect the Cost of Oil Furnace Replacement

Digging a little deeper, there are several additional factors that can affect the cost of oil furnace replacement. A basic furnace for a one thousand square foot single-story home will cost quite a bit less than a high-efficiency model for a three-thousand square foot two-story home. The length and intensity of the heating season in your area, the age and condition of your home’s ductwork, the type of furnace you currently own, and any additional accessories, like whole-home electronic air filters or purifiers can add cost as well. Here’s a closer look:

Size of your home – Furnaces are not a “one size fits all” type of appliance. A furnace designed to heat a smaller, 1000 square foot home won’t keep up with the needs of a larger three- or four-thousand-square-foot home. Furnaces designed for larger homes will provide more heating capacity (BTUs), which can require larger/higher capacity heat exchangers. As you would expect, a bigger furnace means a bigger price tag.

Climate – Colder climates can affect a furnace’s ability to keep up with your home’s heating demand. For example, a home in a hot climate might need a furnace to provide 20 – 30 BTUs per square foot. A home in a cold, freezing climate might need a furnace to deliver 50 – 60 BTUs per square foot to maintain your comfort. That’s a significant difference, especially for a larger home.

Ductwork – Oil furnaces are forced-air systems that require ductwork to deliver heated air to your living spaces. Depending on the age and condition of your home, you may need to repair, replace or install new ductwork. If your home requires major ductwork average costs can range from $2,500 to $6,600.1 If your existing ductwork is adequate, you may need to cover some nominal charges at up to $40 per linear foot.1

Energy efficiency  The components it takes to turn a standard efficiency furnace into a high efficiency model – like a variable speed bower, more sophisticated electronic controls or an additional heat exchanger – can add cost. In some cases, the price difference can be significant.

Oil tank replacement or maintenance – Depending on the age of your system, you may need to have your oil tank replaced or the oil lines unclogged. A new oil tank can range from around $1000 for a basic above-ground model to $6200 for an in-ground tank.2

Additional equipment – Many furnaces function as a part of a home’s central air conditioning system, so if your furnace is failing, it may be time to assess your cooling system as well. Because heat pumps provide both heating and cooling, they can pair with an oil furnace to create a dual fuel system. You might also consider adding a whole-home air purifier, humidifier or dehumidifier to improve indoor air quality with your new system. Of course, any additional equipment will add to your final tally.

If all of this is new to you, it may be time to take a step back and learn a little more about how oil furnaces work. When you do, it can make communicating with your local HVAC professional easier as you explore new furnace costs for your home.

Home Size and Oil Furnace Replacement Costs

While square footage alone doesn’t determine the right oil furnace replacement for your home, it is a determining factor. An experienced HVAC professional will assess not only the size of your home, but the general layout, number and quality of windows, number of stories, your local climate and other variables before making a final recommendation. However, oil furnace replacement costs for a 1000 square foot home can range between $6,425 and $7,420, compared to a range of $6,700 to $7,685 for a two-thousand square foot home1.

High-Efficiency Oil Furnaces

If you are looking for a highly efficient furnace, be sure to check the AFUE ratings of the furnaces you are considering. A higher AFUE means a more energy efficient furnace. High efficiency furnaces are more expensive at first but can save on your monthly energy bills for the life of the furnace. A standard efficiency oil furnace can range from $3,500 – $7,500 compared to a high efficiency model that might cost between $6,000 -- $9,1751.

Frequently Asked Questions

Still have some unanswered questions? Here are some answers to a few frequently asked questions.

What is the life expectancy of an oil furnace?

When following the manufacturer’s recommended maintenance schedule, you can expect a good quality furnace to last fifteen to twenty years. For more on what can affect the lifespan of a furnace, check out our write-up on How Long Does a Furnace Last?

How do I know when my oil furnace needs to be replaced?

When it comes to furnaces, it’s the age-old question: repair or replace? After 15 years, a furnace has had a pretty productive life, but that doesn’t necessarily mean it’s time for a new one. However, if you start having issues like higher energy bills, funny noises or smells, carbon monoxide leaks, or the old system just doesn’t keep up with demand, it might be time to start researching your options.

How does the cost to replace oil furnaces compare to other types of furnaces?

Of the three main types of furnaces – gas, oil and electric – electric furnaces are typically the least expensive to purchase and install. However, they aren’t necessarily the best choice for colder climates. In parts of the country where natural gas furnaces, propane furnaces, and oil furnaces are prevalent, initial costs for the furnaces themselves are closely matched. The final installed costs can vary widely depending on complexity of installation, cost for propane or oil tanks, and other variables.

If your current oil furnace is showing signs of age, it may be time to start researching costs for a new system. While the number of factors that affect oil furnace replacement costs can be overwhelming, there is a simple way to clear the air. Contact your local Carrier dealer for a professional assessment of your home and an accurate estimate for a new oil furnace.



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