Heat pump installation and costs

HVAC Logo IconBy HVAC.comJuly 31, 2023
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When it comes to heating, homeowners have many options. Some are better suited for cold climates than others, and it can be tricky determining the best one for your home. If you’re looking for an inexpensive and efficient heating system, you might consider a heat pump.

If you’ve never heard of heat pumps before, and aren’t sure how they work, this Homeowner’s Guide will cover everything you need to know, including heat pump installation. Learn how they work to produce and deliver heat, and what types of heat pump systems are available, to help guide your HVAC installation choice. We also cover which homes are best suited for a heat pump system and heat pump costs.

What is a Heat Pump System?

Furnaces burn fuel to heat the air around them, which is then circulated through the home. Unlike furnaces and boilers, heat pump systems do not create heat. Instead, they transfer heat from one area to another. Because they do not create heat, these systems use less energy than furnaces and boilers do.

In addition to heating, heat pump systems are also used to cool homes. They move heat out of the home to lower indoor temperatures. Heat pumps are used as a combination heating and cooling system, or in addition to conventional heating and cooling equipment.

Types of Heat Pumps

Air-Source Heat Pump Systems

An air-source heat pump absorbs warmth from outdoor air and transfers it inside your home. Even if it’s cold outside, abundant warmth still exists in outdoor air. By moving heat indoors, the heat pump system causes your interior areas to feel warmer.

To cool your home, air-source heat pumps draw the heat out of your home. By removing the heat, your home feels cooler.Under optimal conditions, air-source heat pump systems can drop a home’s energy consumption by as much as 40 percent.

Geothermal Heat Pump Systems

Instead of moving heat energy from the air, geothermal heat pump systems use underground heat as an energy source. Sometimes called ground-source heat pump systems, geothermal systems use a ground loop to tap into ambient below-ground heat. This system of fluid-filled piping absorbs below-ground heat and moves it up to the home’s heat pump, where it is then transferred indoors to heat the home.

Geothermal heat pump systems can also be water-source. This means they pull heat energy from a nearby water source with consistent temperatures, such as a lake or pond. The heat transfers into the home.

To cool the home, geothermal systems draw heat from inside and transfer it into the ground or water source. Either the ground or the water, depending on the type of system you have, becomes a heat receptacle for the excess heat in your home.Geothermal heat pump systems can reduce household energy use by up to 60 percent! They offer excellent humidity control and long service life.

Factors to consider before buying a heat pump

A number of factors, from your climate to existing ductwork, will influence whether or not a heat pump system is right for your home. A heat pump system’s cost can rise quickly if your home isn’t a good fit for one, and in certain colder states heat pumps cannot provide the expected efficiency. You may discover that another type of heating system is a better choice.


Air-source heat pumps only run efficiently when outdoor temperatures are above freezing. If you live in a region where temperatures drop below 32 degrees, you shouldn’t choose a heat pump as your sole heating source.

In an area where temperatures reach freezing, air-source heat pumps make good primary heating systems. You’ll want to have a backup system installed, such as a gas furnace, which can take over when temperatures reach freezing. Your heating technician can install controls which automatically shut down the heat pump if temperatures reach and drop below freezing. The controls will call for the furnace to come on, efficiently heating the home in these conditions.

Geothermal heat pump systems are another alternative in areas with freezing winters. Despite freezing air, the temperatures below ground remain constant around 55 degrees. This is more than enough heat to warm your home as desired.

In areas with mild winters, air-source heat pump systems are a perfect option to provide the heating you need. Depending on the specifics of your climate, you may not need a backup heating system.


If you switch to an air-source or geothermal heat pump from a conventional forced-air heating and cooling system, you will likely be able to reuse your home’s existing ductwork, if it is in good shape. If you do not have ductwork installed in your home, the added expense to install ductwork may make traditional heat pump systems cost-prohibitive.

A ductless mini-split heat pump system allows for heat pump use in homes without ductwork. Individual indoor units mounted on walls or ceilings connect to an outdoor condenser. Homeowners benefit from the savings heat pumps offer, as well as the system’s inherent zoned comfort control.

Natural Gas Lines

If your home isn’t connected to existing natural gas lines, new furnace installation could require installing gas lines. This can increase the price of a furnace dramatically compared to heat pump costs, and may mean a heat pump is the better option.

Heat Pump Pricing

There are multiple types of heat pump systems. Heat pump pricing varies from one type of system to another. The final heat pump cost depends on:

  • Heat pump unit cost
  • Labor costs
  • Additional components needed for the system

Below, you’ll find a breakdown of the costs involved when installing a new heat pump heating and cooling system.

Heat Pump Cost by Equipment Type

Heat pump pricing depends on many factors. The type of heat pump, its capacity, and other elements affect the cost of the unit. Below, we’ll discuss general heat pump cost and the elements which factor in.

Ducted heat pumps

Ducted heat pump heating and cooling systems act much like traditional central heating and cooling systems. The heat pump unit sits outdoors, and the indoor fan coil works to move conditioned air into living spaces via a duct system. A ducted heat pump system may be most affordable if your home or building has an existing duct system that is in good shape. Using existing ductwork will eliminate the need to install an expensive new duct system, which can cost thousands.

The price to purchase a ducted heat pump and have it installed runs on average $5,600, but this cost can go well over $10,000 depending on the brand, energy efficiency, labor warranty, and other features.

Ductless heat pumps

In homes or buildings where duct systems do not exist, ductless heat pump models are an option. These systems, sometimes called ductless mini-splits, include an outdoor condenser/compressor unit and one or more indoor air handlers.

Ductless mini-split heat pump systems generally cost $1,500 to $2,000 per ton of cooling capacity for just the equipment, not including installation. With installation, ductless mini-split heat pump systems run an average of $4,000 to $5,000. This is approximately 30 percent more than central heating and air conditioning systems, minus the duct system.

Geothermal heat pumps

Geothermal heat pump cost is far more than other heat pump types when installing the entire system. Geothermal systems require underground ground loops to harness the Earth’s natural energy. Installing one involved excavation, running hundreds of yards of piping, burying the loop, and more. This process is quite expensive. Installing a new geothermal heat pump to work with an existing ground loop is far cheaper.

Heat pump pricing for the geothermal heat pump itself range from $1,500 to $13,000 depending on the model, not including installation. Depending on the size needed to heat and cool your home or business, installation can cost $10,000 or more.

Using the above information as your heat pump pricing guide, you may confidently shop for a new heat pump system as well as an HVAC installer in your area to do the job. There may be variables not mentioned above that are necessary to complete your project. Work with a heating and cooling professional you trust to ensure you’re getting the best price along with quality workmanship.

Frequently Asked Questions

How much does a heat pump cost? 

The price will depend upon your home’s size and the heat pump’s rating. Prices can range from around $700 for ductless mini split systems up to $13,000 for a geothermal heat pump system, not including installation. 


How much does it cost to install a heat pump? 

The cost for heat pump installation also depends on the size of the unit and whether it is a single-room or whole-home system. A single-room air-to-air system can cost as low as $500, including installation. Whole-house units, on the other hand, range in price from $2,500 to $7,500, including installation. Geothermal heat pumps typically require excavation to install, which adds several thousand dollars to the cost.


How much does it cost to run a heat pump? 

The type of heat pump you select, the climate where you live and the temperature you set at home will all impact the cost of running a heat pump. A highly-efficient model could save you 30% to 40% on your energy bill.


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