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How much do heat pumps and mini splits cost?

Last updated 5/10/2023

costs and benefits of air source heat pumps

By Liam McCabe

Heat pumps and mini splits (roughly the same thing) can handle all of your home's heating and cooling needs. Since they’re better for the environment than traditional HVAC systems, most heat pumps are eligible for hefty incentives to trim your initial costs. With labor and equipment, our data suggests that on average you’ll pay about $16,480 after incentives to add a heat pump or mini split system to your home. 

That number is based on quotes for real-world projects that actual heat pump installers uploaded to the EnergySage Heat Pump Marketplace between November 2022 and March 2023. The prices include both ducted heat pumps and ductless mini-splits, and the quotes ranged from as low as $4,800 for a smaller, simpler setup, and up to $45,240 for a large multi-zone heat pump installation.

While these projects are exclusively in Colorado and Massachusetts, the prices are in the ballpark of what homeowners would pay anywhere in the US with cold winters. We expect the average prices will trend lower In warmer parts of the country. We’re also only covering air-to-air heat pumps here, not geothermal heat pumps, air-to-water systems, or other less-common types of heat pumps.  

Why is there such a wide range of prices? How does it stack up to other kinds of HVAC systems, like a paired furnace and air conditioner? Do heat pumps cost less to run than a gas furnace or other heating systems? It’s all complicated! We’ll help you figure out what to expect based on your home, your local climate, and your other heating and cooling options.

Key takeaways
  • Getting an AC? Just buy a heat pump instead: They work the same way in cooling mode, and thanks to a new tax credit and other incentives, you can find a heat pump that will cost less than an air conditioner.
  • Heat pumps tend to beat oil, propane, and “regular” electric heat in the long run: The upfront cost for a heat pump installation can be high, but they can cost so much less to run than these expensive heaters that they’ll pay for themselves over time.
  • Heat pumps can beat gas—sometimes: Natural gas is cheap, but if your electricity is cheaper (rooftop solar?) then a heat pump can win on cost. You could also look into a hybrid system: Heat pump for the spring, summer, and fall, and a gas furnace for the winter.
  • Cold-climate heat pumps can be expensive: The equipment, installation, and cold-weather operation can all cost extra vs. warm-weather models. But with incentives, the price can be competitive with other kinds of HVAC.
  • Bigger houses don’t always mean pricier heat pumps: A 5-ton heat pump is only marginally more expensive than a 3-ton heat pump, because the installation is basically the same—at least for ducted systems.
  • Ductless mini-splits have a huge price range: Each zone costs $5,000 on average, and that’s true whether it’s a single-zone system or an 8-headed multi-split. So small homes have smaller install costs, while big homes can cost upwards of $40,000.
  • Ready to shop for a heat pump? The EnergySage Heat Pump Marketplace can give you an instant estimate for how much it could cost, and connect you with a vetted installer.

Heat pumps are a better deal than air conditioners now

If you’re installing a new cooling system, look into getting a heat pump (or mini split, basically the same thing) instead of a cooling-only air conditioner.

Here’s why this makes sense: In cooling mode, heat pumps and “regular” ACs work identically. You can buy a heat pump with the same cooling specs (BTU and SEER rating) as an AC, and expect the same comfort and energy costs. Thanks to new incentives, the heat pump should almost always cost less than an AC with the same specs. The cost of installation should be roughly equal (as long as installers pass along all the savings).

For example: A basic, minimum-efficiency central AC can cost around $3,250 at wholesale. (That includes the compressor / condenser unit, and the indoor air handler.) A ducted heat pump from the same brand that’s efficient enough to qualify for a new federal tax credit costs $4,290. Apply that $2,000 tax credit, and it more than offsets the difference. That’s before any local incentives.

You could even put the extra cash toward a higher-performance heat pump that’ll keep you more comfortable and save money on your utility bills over time.

“Our old central air conditioner had died. I was planning to just swap it out for a new one, but I figured I’d at least ask the contractor about a heat pump,” says Rob Lawless, who works here at EnergySage in Massachusetts. It turned out that he and his wife would actually save a few thousand dollars by installing a cold-climate heat pump instead of replacing his central AC, thanks to the huge state incentives. They got the new system installed in spring 2023, and it should be able to handle all of the heating next winter (though they kept their gas boiler for hot water, and might use it for space heating if there’s an extreme cold snap).

Another example: In a house with no existing ductwork, the easiest, most affordable way to install AC is typically a ductless mini-split system, with multiple indoor units, aka heads or zones. The installation can still be pretty expensive, but it’s usually cheaper than running new ductwork when the walls are already finished. Most multi-zone ductless systems are only available as heat pumps anyway, so you’ll end up with super-efficient heating even if that’s not the main reason you bought the mini-splits. You’re still entitled to the incentives. The heat is like a bonus.

The catch: In cold climates, that affordable $4,200 heat pump can’t carry you through the winter by itself, because it doesn’t really work below 32 Fahrenheit. But there are workarounds here.

First, you ought to look into whether you’ll actually save money by choosing to install a high-end heat pump that actually can work well in cold climates. Some states offer such generous incentives that they actually can end up costing less to install than regular ACs or basic heat pumps—we see it all the time in our heat pump marketplace, and it worked out this way for our coworker Rob, too.

If it’s too pricey to completely replace a traditional heating system with a heat pump, then you can keep your old furnace or boiler and use it in combination with a heat pump. This kind of setup goes by a few names—hybrid heat pump, dual-fuel, backup heat—but they all refer to the same basic idea. The heat pump does all of your cooling and some of your heating, then switches over to another heating system when the outdoor temperature drops below a certain level. (More on this below.)

Heat pumps vs. oil, propane, or “regular” electric heat: Usually a good deal

Cooling aside, there’s a good chance that a heat pump is also the most affordable way to heat your home. This is most likely if you currently use electric resistance-based heating, like an electric furnace or baseboard radiators, like 20% of the US.

Heat pumps also run on electricity, but much less of it than electric resistance, to the tune of 60 percent savings on average. That is, if you pay $1,000 per winter using traditional electric heat (a bit below the forecasted US average for 2022-2023), you’d only pay $400 per winter with a heat pump that runs at average efficiency. With a higher-efficiency heat pump, you could save even more.

Heat pumps also tend to cost less to run than oil or propane heating systems (each found in 4% of US households). In some states, heat pumps can shave $1,000 or more off your annual heating bills compared with these pricey “delivered fuels.” Even in places with expensive electricity, oil and propane still only break even with a typical heat pump at best.

The catch is that heat pumps tend to cost more up front, even after incentives, particularly if you need electrical upgrades, ductwork modifications, or a whole-house ductless system (to replace hot-water radiators). So most people will have to wait several years to see savings, as the investment trickles back through lower energy bills. The payback period is a case-by-case thing.

But again, heat pumps also handle your cooling and should cost less to install than ACs, thanks to incentives. So if you look at the combined cost of ownership for heating and cooling, the math should work in a heat pump’s favor pretty much all the time when it comes to electric heat, and very often for heating oil and propane.

Heat pumps vs. natural gas: Sometimes a good deal—it depends

On average, gas is the most affordable kind of heating fuel. (Most homes with access to a gas line use gas for heat—about half the country.) But it’s not true everywhere, and sometimes heat pumps can beat gas on cost, straight up.

It helps to live somewhere with mild winters, so you don’t need to shell out for an expensive cold-climate heat pump. A basic heat pump should always cost less to install than the combined cost of a separate AC and furnace, so if you can get by on that equipment (maybe with a small heat strip for occasional backup), you’re at an advantage.

Cheap electricity also helps. Based on average energy prices for December 2022 as reported by the Energy Information Administration (EIA), a heat pump running at average efficiency should cost less to run than a gas system in at least 9 states. With a more generous assumption about heat pump’s real-world efficiency, it’s upwards of 20 states, with many more where heat pumps and gas essentially break even.

None of this accounts for workarounds like hybrid / dual-fuel systems or rooftop solar, or the possibility that the cost of gas could rise faster than the cost of electricity over the next decade—all of which make heat pumps look like a better deal. Ground-source heat pumps are another option that could pay off in the long run. They’re very expensive to install, but so efficient that they can quickly pay for themselves through long-term energy savings even compared with gas.

It’s no surprise then that the states that already have the most heat pumps tend to have both warm winters and relatively inexpensive electricity compared to natural gas. Of the roughly 17 million homes in the US as of 2020 that used a heat pump for most of their heating, nearly 13 million of those were installed in the South, according to the Energy Information Administration.

In cold climates, heat pump prices are higher

All of the real-world pricing data we’ve collected so far comes from cold climates: the metro areas around Boston, MA and Denver, CO. We’ve found that the average cost of installation is around $16,500 after incentives, which is in line with other credible estimates (and it’s similar for both locations, despite much bigger rebates in Massachusetts).

Warm-weather heat pumps, on the other hand, only cost about $7,800 to install, according to Consumer Reports’ member survey from 2021. What’s up with this huge difference?

One important reason for this is that heat pumps that can work well in cold climates simply cost more than other kinds of HVAC equipment.

A basic warm-weather heat pump that costs about $4,200 will stop working well around 32 degrees Fahrenheit. If you live in a part of the country where it regularly drops below freezing and you don’t want to rely on backup heat for long stretches of the winter, you’ll need a cold-climate heat pump. Cold-climate heat pumps start around $5,000 for a 3-ton system, but the models that can work well below zero degrees Fahrenheit can cost considerably more, up to $9,500. (For reference, a high-efficiency furnace starts at around $1,650, and works well in any weather.)

Houses in cold climates also need a bigger heat pump per square foot of living space. It takes more energy to keep a house comfy when it’s 5 degrees F than when it’s 25 degrees F, so the colder it can get in your corner of the world, the more BTUs your heat pump will need to be able to crank out. Each extra ton of capacity adds about $700 to $1,000 to the wholesale cost of equipment. (More on heat pump sizing here.)

The total cost of installation is trickier to parse. On average, it’s more expensive to install a cold-climate heat pump (again, $16,500 after incentives) than to install both a furnace and air conditioner ($6,870 and $5,600 respectively, according to Consumer Reports’ most recent member surveys). There’s a ton of nuance here, though.

In our heat pump marketplace, we’ve seen plenty of quotes for whole-house, cold-climate heat pumps that cost less than $10,000 after incentives—easily a better price than a new AC and furnace. Incentives make this possible, but these systems seem to have simple installations: They either tie into existing ductwork that’s big enough to handle the heating load, or they’re ductless systems with only a few zones (likely in a smaller house, though we don’t know that part for sure).

If your installation requires extra labor—whether it’s electrical work, duct modifications, or simply the time-consuming process of installing a bunch of ductless heads in every room—you’re probably going to end up paying more up front than you would if you simply swapped out your old equipment.

The operating costs in cold climates can be relatively high, too. Heat pumps lose efficiency in very cold weather, and grid electricity tends to be expensive compared to gas in cold places, too.

That said, cold-climate heat pumps still tend to cost less to run than oil and propane, and they always beat basic electric-resistance heat. And a couple of other strategies can bring down the cost of a heat pump, like rooftop solar or a hybrid / dual-fuel system.

Installation costs don’t always scale with the size of the house

Larger homes usually need bigger heat pumps (measured in BTU or tons). There’s some nuance to it based on the home’s layout and build quality, but that’s basically how it works.

Bigger heat pumps don’t cost too much more than smaller heat pumps do. The wholesale price goes up by something like $700 to $1,200 for every extra ton of capacity. It’s not nothing, but it’s a drop in the bucket of the overall cost, which is well into the five figures in most cases.

In fact, based on the quotes uploaded to our heat pump marketplace, the average cost of a 5-ton system (the largest that a single residential outdoor unit can get) is only $700 more expensive total than a 3-ton system (the most common size by far).

How is that possible? Because it usually takes the same amount of effort to install a heat pump regardless of the size, especially with centrally ducted systems. The outdoor units are a little bigger, but the connections are the same, and it takes roughly the same amount of time. All you’re paying for is the extra equipment costs. (In fairness, we expect that we’ll see a bigger difference between 5-ton and 3-ton systems as we collect more quotes in our marketplace; 5-ton equipment costs about $2,000 more than 3-ton equipment, so the difference should be greater than the $700 that we saw.)

Extra time on site is what really drives up the cost. Every day that an installer spends at your home is at least a few thousand dollars’ worth of value—not only the manual labor costs, but the overhead to support the system designers, the truck and the tools in it, and the admin workers back at the office handling paperwork and scheduling.

One important caveat: Once you get beyond 5 tons, the rules seem to change. The average cost of a 6-ton system is considerably higher than smaller setups, according to the quotes in our marketplace. That’s likely because when you jump to that size, you’re actually getting two separate 3-ton systems running in parallel, which means two separate installations, basically.

Ductless heat pumps have a huge range of prices

Ductless systems are another example where larger systems can get really expensive. This doesn’t have so much to do with the tonnage as it does the number of “zones” or indoor heads you’re getting installed. Every zone is like a miniature heat pump system unto itself, adding extra materials costs and a couple hours of labor costs each—there’s no price break for going bigger, like you tend to see with ducted systems.

On average, we found that each ductless zone costs about $5,130 after incentives. That average holds up pretty consistently whether it’s a single-zone setup or an 8-headed multi-split. The range of costs per zone was between $1,600 and $10,845, but that includes a few big outliers—the bulk of projects we’ve seen fell in the range of $3,000 to $6,000 per zone.

The good news is that if you only need a few heads, a ductless system can be pretty inexpensive. Smaller houses and open floor plans will likely result in lower project costs. If you’re only looking to add cooling and heating to a couple of rooms, a ductless system is almost certainly going to cost less than extending your ductwork.

But if you’re outfitting a multi-level, multi-bedroom house with a head for every major living space (excluding bathrooms and hallways), the project can get pretty pricey. 

Different styles of indoor units can affect the cost, too. Most of the quotes we’ve seen are for systems that exclusively use wall-mounted heads, which are the most common type. But you can pay a few hundred dollars extra for indoor heads with a more discrete design, like ceiling cassettes or low-wall / floor-mounted units.

That said, as expensive as a whole-house ductless system can be, it still tends to cost a lot less than adding new ductwork. Ductless heat pumps are usually more energy-efficient than ducted systems, which brings down the long-term cost of operation, too.

A hybrid heating system can be a great deal

A hybrid heating system (aka a dual-fuel heat pump, or just “a heat pump with backup”) relies on a heat pump in milder weather, then switches to traditional equipment like a gas furnace, hot-water radiators, or electric-resistance heat in colder weather. A typical switchover temperature can be anything from 40 Fahrenheit on down, depending on the heat pump’s specs, local energy prices, your environmental goals, and your home’s layout and heating needs.

Some people keep hybrid systems for peace of mind—knowing that a have backup if there’s a brutal, unexpected cold snap that their heat pump isn’t designed to handle. (Modern fossil-fuel heating systems need electricity to work, so you’re out of luck in a power outage either way unless you have a generator or battery storage.)

Hybrid systems can also end up being the most cost-effective kind of HVAC system, especially if you’re pairing a new heat pump with an existing heating system that you’ve already paid for. 

Here’s the key factor: In mild weather, between 60 F and 35 F, heat pumps are hard to beat. At those temperatures, they’re super-efficient, and should cost less to run and keep you more comfortable than any other kind of heating system. They’re also not particularly expensive to install. As we covered above, they should actually cost less than central AC. Apples to apples, a ducted heat pump costs less than a ducted AC thanks to incentives. And ductless mini-splits will generally cost less to install than a whole new run of ductwork.

As we covered, things get murkier in cold climates. Heat pumps that can handle temps below freezing tend to cost thousands of dollars extra (though local incentives can change this). Retrofitting a cold-climate heat pump into an old house for 100% heating coverage can also come with some complications—and extra costs—like ductwork modifications, electrical upgrades, and more. Even cold-climate heat pumps become less energy-efficient as the temperature drops (and they’re usually not quite as efficient as advertised), so your overall heating costs can end up being quite a bit higher than heating with natural gas. 

Hybrid heating systems offer a workaround: Comfort in cold temperatures without a sharp increase in costs, with all the advantages of a heat pump the rest of the year.

This approach carries some risks. If you lock yourself into a fossil system, plus a heat pump that only works well in mild weather, and the cost of electricity drops relative to gas or other fuels, then you won’t be able to take full advantage of the falling costs of electric heat. 

And eventually, your fossil system will break down and need to be replaced. At that point, you’ll either need to upgrade to a whole-house, no-backup heat pump anyway, or lock yourself into another couple decades with a furnace or boiler. Those technologies are likely to become more expensive to operate and install over time, and could eventually be banned. This kind of hybrid is just borrowing time against an inevitable shift away from fossil heat.

With rooftop solar, heat pumps can be a phenomenal deal

If you get your electricity from the grid, heat pumps won’t always save money compared to other kinds of HVAC systems, as we’ve covered. But with free electricity from rooftop solar panels, heat pumps can become an unbeatable deal. 

Even if you can’t completely offset your heat pump’s electricity usage with solar (you’d easily need at a least a dozen panels, plus full net metering), every free kWh helps drive down your total energy costs. The upfront costs are high, but tax credits and other rebates can help bring the cost down, along with financing options. Done right, it works out to be an excellent investment over the lifespan of all the equipment.

You might need extra upgrades to make a heat pump work well

In all but the very coldest parts of the US, you’ll have no trouble finding a heat pump that has the specifications to keep your entire house comfortable all year, with no backup heating system. 

But can your home’s other systems—the weather envelope, the ductwork, and the electric panel—make the most of the heat pump’s capabilities? 

Plenty of homes will do fine. Newer houses built to modern code, warmer climates, and existing central AC systems all make it easier to switch entirely to a heat pump.

Sometimes you just can’t avoid extra work, though . If your electrical panel doesn’t have two open slots for a new heat pump, for example, there’s no getting around it—you’ll have to hire an electrician to figure something out.

Then there’s the gray area: Insulation, air sealing, and ductwork modifications that you can technically skip, but you’re really better off getting done for the sake of comfort and the longevity of your equipment. Several of the most expensive quotes that have come through our heat pump marketplace include these projects in their scope of work.

A leaky, drafty home is one of the root causes. Buildings that lose heat faster need bigger heat pumps to keep up. You can pay a little extra for a bigger heat pump, that’s not a big problem. But that big heat pump should really be connected to big ducts—and you might not have ducts that large in your house, particularly if you’ve been heating with an old furnace and don’t run the AC very often. It’s a bit of a paradox, but a super-sized heat pump can also struggle on milder days of the year. 

What’s the best solution? Add some insulation to your attic and walls where it’s practical, and seal any obvious air leaks. You’ll be able to install a smaller heat pump, which’ll save you some money up front, likely work better with existing ducts (though the installer might still suggest modifications), and keep you more comfortable more often throughout the year. It’s not free, but there are federal incentives for this kind of work now, and lots of states have cost-saving programs, too. (And some heat pump incentives require you to at least get an energy audit, if not additional insulation and air sealing before you qualify.)

The lowest price is not the same thing as the best long-term deal

With a system as important for your comfort, your energy costs, and even your health and the longevity of your home, it’s more important to get HVAC installed right than to get it installed cheaply.

HVAC in general and heat pumps in particular are tricky to install. A survey of data by the Department of Energy found that something like 70 to 90 percent of heat pumps and air conditioners are not installed according to best practices. That can lead to sub-par comfort, lower-than-advertised energy efficiency and higher energy bills, and a shorter lifespan for the HVAC equipment.

For example, most cold-climate heat pumps are advertised to run at a seasonal efficiency of 300% or more. It’s possible! Some systems actually achieve this fantastic result, which makes heat pumps cost-competitive with natural gas heating in big chunks of the US. But multiple studies have found that the average real world efficiency for these systems is about 250%. That means half of all systems are less efficient than that.

The system’s overall performance depends in large part on an individual installer’s competence and attention to detail—and your willingness to pay for quality work. If an HVAC contractor recommends ductwork upgrades, they’re probably not just making it up to squeeze extra money out of you, for example.

Like any major home project, your best bet is to shop around. The EnergySage heat pump marketplace makes it easy. You’ll enter some information about your house, and if you live in one of our service areas, we’ll give you an instant cost estimate based on similar homes nearby, and send only the relevant details to our network of vetted installers. You can connect with them through our online dashboard (they will not call or email you directly until you give them permission), and go from there. If you have any questions about what to expect or need help comparing quotes, our dedicated Energy Advisors are there to help. We have marketplaces for rooftop solar, battery storage, and community solar memberships, too.

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