How Much Does an Oil Furnace Cost? [2025 Data]

Oil Furnace Replacement Cost Factors

The main factors that impact how much oil furnace replacement costs are your home’s size, the unit’s efficiency, the brand you choose, and labor costs in your area.

Home Size

One of the primary factors influencing how much your new furnace costs is the size of your home and the heating system itself. Larger homes typically require more powerful furnaces to adequately heat all living spaces.

Additionally, the complexity of the heating system's design and layout can impact installation costs. 

Energy Efficiency

Furnaces are given an Annual Fuel Utilization Efficiency (AFUE) rating to measure how efficiently they convert fuel to heat. Investing in an energy-efficient oil furnace not only reduces your carbon footprint but also helps you save on heating costs over time. 

• Standard efficiency furnaces cost between $1,200 and $4,000 and have an AFUE rating between 80% and 87%. The cost upfront is less, but they save you less on your energy bill in the long run.

• Energy-efficient furnaces with AFUE ratings of 90% to 97% have a higher upfront cost between $3,000 and $10,000, but their long-term benefits can outweigh the initial investment. 

Brand

The brand of the oil furnace plays a significant role in determining the overall cost. Well-established brands with a reputation for quality and reliability might come with a higher price tag, but the long-term value and warranty offered by reputable brands is often worth it. Investing in a trusted brand can prevent frequent repairs and replacements down the line.

Labor

The labor involved in installing a new furnace is a factor to consider in your overall furnace replacement budget. Labor costs for replacing an oil furnace can vary between $1,000 and $3,000 based on your location and the complexity of the installation process. Skilled HVAC professionals ensure proper installation, which is crucial for the furnace's optimal performance and longevity. 

Additional Costs to Consider

Ductwork Repair or Replacement

During the oil furnace replacement process, it's essential to assess the condition of your home's ductwork. If your ducts are damaged or poorly insulated, addressing these issues can improve heating efficiency and indoor air quality. Air duct replacement costs between $25 and $55 per linear foot, averaging between $1,500 and $5,500 overall, and this type of update can lead to long-term savings on energy bills.

Asbestos

Homes built before the 1980s might have asbestos-containing materials, which can be hazardous when disturbed. If your furnace is located in an area with asbestos, inspection and testing could cost an additional $250 to $700, and asbestos abatement could cost $700 to $2,200. These services ensure the safety of your household but can add to the overall cost.

Removal of Old Furnace

Properly disposing of the old oil furnace is another cost consideration. Depending on local regulations and your contractor’s contract, you might need to pay for its removal and disposal, which can cost between $100 and $400.

Oil Tank Replacement

Different types of furnaces require different fuel storage solutions. Your oil furnace is connected to an oil tank, and its condition and location are vital. Underground tanks might require excavation for removal or replacement, which can cost between $1,600 and $6,200. Above-ground tank replacement costs between $1,000 and $4,300, and these should be inspected for corrosion or damage that could affect the new furnace's performance.

Other System Updates

Other updates might be needed to ensure seamless integration with the new furnace to enhance the overall efficiency and safety of your heating system:

• Electrical repairs: $100–$250 

• Condensation drain: $200–$600

• Chimney liner: $900–$3,800

• Air duct cleaning: $25–$45 per vent

Inspection & Permits

Local regulations often require permits for furnace replacements. The cost of obtaining permits and scheduling inspections should be factored into your budget.

DIY vs. Hiring a Pro 

While DIY projects can save money, replacing an oil furnace is best left to professionals. The complexity of the installation process, the need for specialized tools, and the potential safety hazards make this a job for an experienced local boiler repair company. Incorrect installation can lead to inefficiency, increased energy consumption, and even safety risks.

Cost of Common Oil Furnace Replacement Add-Ons

When replacing an oil furnace, it’s a good time to examine your home’s energy efficiency and upgrade or add features that will make your system more efficient. 

Adding Energy-Efficient Windows

Upgrading your windows to well-insulated models complements your new furnace's efficiency efforts. Energy-efficient windows cost between $325 and $2,000 per window, but they prevent heat loss, reducing the workload on your heating system.

Upgrading Smart Thermostat

A smart thermostat costs $225 to $400 and allows you to control your home's temperature more effectively. This optimizes energy usage and further enhances your furnace's efficiency.

Updating Home Insulation

Improved insulation helps maintain a consistent indoor temperature, reducing the strain on your furnace. Adding new insulation or updating existing insulation costs $900 to $3,000 and can lead to substantial energy savings.

How to Save Money When Replacing an Oil Furnace

To minimize the cost of replacing an oil furnace, consider the following strategies:

• Obtain multiple quotes: Contact several HVAC professionals to ensure competitive pricing.

• Explore energy rebates: Research available energy rebates or incentives that can offset costs.

• Bundle services: If other HVAC updates are needed, bundling services can be more cost-effective.

• Ask about furnace removal discounts: Contractors sometimes offer discounts on oil furnace removals when the old unit contains valuable scrap metals.

• Keep up on maintenance: Regular preventative maintenance of your new furnace can save energy and prevent costly repairs in the future.

How Angi Gets Its Cost Data

Home is the most important place on earth, which is why Angi has helped more than 150 million homeowners transform their houses into homes they adore. To help homeowners with their next project, Angi provides readers with the most accurate cost data and upholds strict editorial standards. We extensively research project costs to develop the pricing data you see, so you can make the best decisions for you and your home. We rely on reputable sources, including the U.S. Bureau of Labor Statistics, academic journals, market studies, and interviews with industry experts—all to ensure our prices reflect real-world projects. 

Want to help us improve our cost data? Send us a recent project quote to costquotes@angi.com. Quotes and personal information will not be shared publicly.