When it's time to replace your heating, the big choice is increasingly between a heat pump and a furnace. They work differently and suit different situations, so the right answer depends on your climate, fuel costs, and budget.

How they differ

A furnace burns fuel (usually natural gas) to make heat. A heat pump moves heat from outside to inside using electricity, and reverses to cool in summer — so it both heats and cools. Because it moves rather than makes heat, a heat pump delivers several units of heat per unit of electricity.

Cost and efficiency

Heat pumps cost more upfront but run very efficiently, especially compared with electric, oil, or propane heat. A gas furnace is cheap to run where gas is inexpensive. Rebates often narrow the heat pump's higher install cost. In milder coastal climates, a heat pump usually wins on operating cost; with cheap gas in a very cold climate, the math is closer.

Which to choose

Choose a heat pump if you want cooling too, are replacing electric/oil/propane heat, or want lower emissions and can use rebates. Choose (or keep) a gas furnace if gas is cheap in your area and you face extreme cold. Many cold-climate homes use a heat pump with a gas or electric backup for the coldest days — the best of both.