If you are replacing a gas furnace, the big choice is AFUE tier. The 80% to 95% jump cuts your gas bill by about 19% but adds $800 to $1,500 in venting work to the install cost. In a cold climate that pays back in 4 to 6 years and saves $4,000+ over a 20-year furnace life. In a mild climate the payback runs 10 to 15 years and the case is weaker.
Here is what each AFUE tier costs to install, what the venting looks like, and the safety checks every contractor should perform before they leave your house.
Installation Cost by AFUE Tier
Installed prices reflect recent contractor quotes for an 80,000 to 100,000 BTU residential furnace in a home with existing gas service:
| Furnace Tier | AFUE | Installed Cost | Venting |
|---|---|---|---|
| 80% single-stage | 80% | $3,200 to $4,800 | Chimney / B-vent |
| 95% single-stage | 95% | $4,000 to $5,800 | PVC sidewall |
| 96% 2-stage | 96% | $4,800 to $6,800 | PVC sidewall |
| 96 to 98% variable speed modulating | 96 to 98% | $6,200 to $8,500 | PVC sidewall |
Add-ons that increase total install cost: chimney liner if you have a gas water heater still using the chimney ($700 to $1,500), new PVC venting if switching from 80% to 95% ($800 to $1,500), gas line upgrade or extension ($500 to $2,000), new return-air ductwork ($800 to $2,500), oil-to-gas conversion ($2,000 to $4,500), asbestos abatement if old furnace insulation contained it ($800 to $2,500).
80% vs 95% AFUE: The Real Comparison
The two main AFUE tiers handle combustion gases very differently. That changes installation requirements, operating cost, and equipment life.
| Factor | 80% AFUE | 95% AFUE |
|---|---|---|
| Installed cost | $3,200 to $4,800 | $4,000 to $5,800 |
| Venting type | Metal B-vent through chimney | PVC sidewall or roof |
| Annual gas use (typical 2,000 sq ft) | 1,000 to 1,200 therms | 810 to 970 therms |
| Annual gas bill at $1.55/therm | $1,550 to $1,860 | $1,255 to $1,505 |
| Annual gas savings | baseline | $295 to $355 |
| Payback on $1,200 install premium | N/A | 4 to 6 years (cold), 10 to 15 (mild) |
| Allowed in northern states (zones 5-7)? | No (90%+ required) | Yes |
| Expected lifespan | 15 to 20 years | 18 to 22 years |
Two notes on the AFUE choice. First, in northern states 90%+ is now required by federal code for new gas furnaces, and that minimum rises to 95% nationwide January 1, 2028. Second, the savings number assumes typical heating use. Heavy use in cold climates can push the payback under 4 years; light use in mild climates can push it past 15.
For more on tier selection beyond AFUE (single-stage vs 2-stage vs modulating), see our deep dive on variable speed vs single stage furnace.
Venting: The Hidden Cost
Venting is the part of furnace installation most quotes underestimate. The type required depends entirely on AFUE:
- 80% AFUE: vents through a metal B-vent (double-wall metal flue) that usually goes up through the chimney. Combustion gases leave at 350 to 400°F.
- 95%+ AFUE: vents through PVC pipe (2" or 3") out a sidewall or roof. Combustion gases leave at 100 to 130°F, cool enough that they condense into water during the heat-exchange process. PVC is required because metal would corrode from the acidic condensate.
Switching from 80% to 95% means routing new PVC venting from the furnace to outside. Cost: $800 to $1,500 for typical runs, more if you need to penetrate masonry or run long distances. Also adds a condensate drain line ($150 to $300).
If your old furnace shared the chimney with a gas water heater, you may need a stainless steel chimney liner ($700 to $1,500) for the water heater after removing the furnace from the chimney. Without enough draft, the water heater's combustion gases can spill back into the house. A real contractor will check this.
The 7-Step Furnace Install Process
This is the furnace-specific sequence. For the broader whole-system install process (heat pumps, AC, ductwork), see the HVAC installation guide. A standard furnace install takes 4 to 8 hours and follows this sequence:
- Gas shutoff and prep: shut off gas at the meter, kill power at the panel, lay floor protection from door to furnace closet. Permit pull is part of the contractor's pre-arrival paperwork.
- Old furnace removal: disconnect gas line at the union, electrical at the disconnect, cut the supply and return plenums free of the cabinet. The 30 to 60 minute job that often discovers chimney liner issues on 80% units.
- Position new furnace: set on the existing pad or platform, level it, connect to the supply and return plenums.
- Connect gas line: install new flex line or hard pipe to the gas valve. Pressure-test for leaks with electronic detector or soap solution.
- Install venting: for 95%+ AFUE, run new PVC intake and exhaust to a sidewall or roof termination. For 80%, connect to existing B-vent through the chimney.
- Electrical and thermostat: wire to dedicated circuit, hook up thermostat wire, configure controls.
- Commissioning: start the furnace, measure temperature rise across the heat exchanger (should be 40 to 70°F), adjust gas manifold pressure to manufacturer spec, test CO levels in flue and around furnace, verify safety controls (limit switch, pressure switch, flame sensor), program the thermostat.
Safety Checks Every Install Must Include
Gas furnace installation is the only HVAC work where corner-cutting can kill you. A cracked heat exchanger or improperly vented furnace leaks carbon monoxide into your house. Make sure your installer performs and documents all of these:
- Gas leak test: on every new gas connection, with electronic gas detector or soap solution
- CO test in flue gas: verify clean combustion (under 100 ppm for sealed combustion, under 400 ppm for atmospheric)
- CO test around furnace: ambient should read 0 ppm in the room
- Draft test: verify combustion gases are leaving through the vent, not spilling back into the house
- Manifold gas pressure: set to manufacturer spec (usually 3.5" WC for natural gas, 10" WC for propane)
- Temperature rise across heat exchanger: measure supply and return temps, verify 40 to 70°F differential
- Limit switch operation: verify the high-limit shuts the burner off if airflow stops
- Flame sensor reading: should be 2 to 6 microamps
- Pressure switch verification: confirms the inducer motor draft before each ignition
- Ignition sequence test: verify clean, reliable ignition on multiple cycles
Ask for the commissioning report in writing. A real installer hands you one without asking. If they say "we did all that" but cannot produce documentation, they probably did not do it.
Install a battery-backup CO detector within 15 feet of any sleeping area regardless of what your installer says. CO detectors cost $25 to $40 and have saved more lives than almost any home safety product.
Common Furnace Install Mistakes
After diagnosing hundreds of poorly installed furnaces, these are the issues that come up most often:
- Oversized furnace: contractor skipped Manual J and installed a 100,000 BTU furnace when 70,000 was right. Short cycles, wastes gas, wears out the heat exchanger.
- Inadequate return air: new furnace pulls more CFM than the old undersized return ducts can supply. Overheats the heat exchanger and trips on high limit.
- Improper gas pressure: manifold pressure not adjusted after install. Either burns too rich (high CO) or too lean (efficiency loss).
- Wrong temperature rise: blower speed not set correctly for the BTU output. Causes premature heat exchanger failure.
- Skipped CO test: installer never measures combustion gas CO levels. Cracked heat exchanger or improper combustion goes undetected.
- Bad PVC venting: insufficient slope on condensate drain, too-long horizontal runs, improper termination clearance from windows or doors.
- Shared chimney with water heater: after replacing 80% furnace with 95%, the water heater is left with too much chimney for proper draft. CO back-drafting into the house.
Most of these come from rushed installs or contractors trying to fit too many jobs into one day. Schedule during off-peak season (April to May or September) to get the contractor's attention.
Code and Regulatory Status
Federal AFUE minimums for new gas furnaces:
- Current (through 2027): 80% AFUE allowed in southern states, 90%+ required in northern states
- Starting January 1, 2028: 95% AFUE required nationwide for all new gas furnace installations
If you are installing a furnace or 2027, you can technically still buy an 80% AFUE unit in southern states. For most homeowners the 95% upgrade pays for itself before the federal rule even kicks in, and the equipment will be future-proof if you ever sell.
Local gas bans: California cities (Berkeley, San Francisco, Sacramento, others) have banned natural gas hookups in new construction. New York State phases out new gas hookups soon. Check your local building department before installing a gas furnace in new construction.
When to Pick a Heat Pump Instead
Gas furnace replacement is no longer the obvious default. Consider a heat pump if your electricity costs under $0.18/kWh, your AC also needs replacing soon, your winter design temperature is above 0°F, or your gas service costs $50+/month in connection fees. Heat pumps run 30 to 40% lower annual operating costs in mild and moderate climates.
Stay with gas furnace if your gas price is under $1/therm, your winter design temperature is below 0°F, your AC is recent and working well, or you want the lowest upfront install cost. See our full comparison in heat pump vs furnace: which is cheaper.
Bottom Line
A gas furnace replacement runs $3,200 to $8,500 depending on AFUE tier and venting work. For most homeowners replacing a furnace today, 95% AFUE is the right choice: $4,000 to $5,800 installed, saves $295 to $355/year on gas, payback in 4 to 6 years in cold climates. Required by code in most northern states already, nationwide by 2028.
Get three quotes, ask for the Manual J calculation, verify the contractor pulled a permit, and demand a written commissioning report after the install with all the safety check results. Anything less puts your house and your family at risk.