Heat pumps: Everything you need to know

Replacing or upgrading your home's HVAC system? Consider an air-source heat pump. Sometimes called mini-splits, these all-electric appliances are fast becoming the standard for heating and cooling all over the world. Since they're so energy-efficient and environmentally friendly, some of the top models are now eligible for big government rebates and incentives.

Need a new air conditioner? It's a no-brainer: Pick a heat pump instead. Need to add HVAC to a room or two? Mini-split heat pumps are the obvious choice. Replacing your heating system? Yep, a heat pump can work, and could save you some money.

Heat pumps have been common in warm parts of the US for decades, but now high-performance heat pumps are becoming an increasingly common option in cold climates, too.

Read on for a primer on heat pumps, and how to decide whether one will be a good fit for your home: What they cost, how they work, who can get one, how to find the right model for your home and local climate—and even when they might not be your best bet.

An air-source heat pump is an all-in-one home heating and cooling system, sort of like an air conditioner that can also make heat. 

In cooling mode, it soaks up heat and then dumps it outside your home (while also reducing humidity).

In heating mode, it soaks up free heat from outside your home (even when it's cold), and moves it indoors. Over the course of a whole winter, a well-installed heat pump should use about a third of the total energy of a typical furnace or boiler, which can translate into big savings on your utility bill, especially if you’re switching away from oil, propane, or electric-resistance heating.  It’ll often keep your home more comfortable than a traditional heater, too.

Heat pumps have had decades of success in America 

Basic heat pumps have been common in the U.S. since the 1970s. About a quarter of all households in the southern U.S. already use a heat pump as their main heating and cooling system, according to the Energy Information Administration. The warm climate is a natural fit for these systems.

The technology has improved by leaps and bounds, and heat pumps that work well in colder climates began to appear in the U.S. about a decade ago. Today, it’s easy to find heat pumps that perform well in extremely cold weather—well below 0 degrees F. Some contractors still insist that heat pumps can’t work in the cold. But tens if not hundreds of thousands of people living in wintery parts of the U.S. have successfully made the switch, as have millions more around the world.

Ductless mini splits have also made it easy to add built-in air conditioning to homes without existing ductwork—say goodbye to those noisy window units. And if you’re building an extension, finishing a basement or attic, or just trying to get more heating or cooling to a part of your home, a ductless heat pump is usually the most cost-effective choice.

As of 2024, interest in heat pumps has reached an all-time high in the U.S. because the federal government and several states now offer huge incentives to many homeowners and business owners who install them. 

Heat pumps are heavily incentivized now because they’ve been shown to shrink carbon emissions from space heating (even when they run on electricity generated in part by fossil fuels). The environmental upside is similar to ditching a gas car for an EV, or adding solar power to your home. The benefits will become even greater over time as the electrical grid keeps getting cleaner.

A heat pump is an all-in-one home heating and cooling system. We cover how they work in depth in another article, but here's the short version:

A heat pump is sort of like a combined furnace and air conditioner, though it's more precise to think of it like an air conditioner that can run backward. 

In cooling mode, it absorbs heat from your warm, stuffy house and dumps it outside—exactly like a traditional AC does, using all the same components and tricks of physics. It reduces indoor humidity, too.

In heating mode, it runs in reverse. It soaks up free heat from outside your home (even when it's really cold outside), and moves it indoors.

This process uses less than half the energy of a traditional heating system, though it's often even more efficient than that. The specifics depend on the heat pump model and how well it's installed. Those energy savings often translate into significant cash savings, depending on what kind of heating system you'd be replacing.  

Heat pumps are incredibly flexible:

• You can use them to heat and cool your entire house, or just one room, or some rooms but not others.

• They can be installed in nearly any single-family house and many townhouses, condos, and apartments.

• They work with ducts, without ducts, and sometimes even with hot-water radiators (though these are rare in the U.S.).

• You can use a heat pump with or without a backup system—it's a matter of personal choice in the vast majority of the country.

The technology has improved by leaps and bounds in the past couple of decades (since the last time most people had to update their HVAC systems). Heat pumps that work well in colder climates began to appear in the U.S. about a decade ago, following a jump in prices for heating oil.

Some contractors still insist that heat pumps don’t work when the temperature drops below freezing. They’re misinformed. Heat pumps are more common in some of the world’s coldest countries. Half of all households in frosty Finland now rely on heat pumps, for example.

As of 2023, interest in heat pumps has reached an all-time high in the U.S. because the federal government and several states now offer huge incentives for installing them. It’s part of the effort to reduce carbon emissions, and heat pumps can make a huge difference on that front. That’s true even when they run on electricity that comes mostly from fossil fuels because they’re so energy efficient. The positive environmental impact is similar to driving an electric vehicle instead of a gasoline-powered car or switching to solar power. The cleaner your electricity, the greater the environmental benefits of a heat pump.

• Recent studies estimate that a heat pump will cost less to own than other HVAC systems for between one-third and one-half of all households in the U.S. 

  The math all depends on individual circumstances: Your home, your climate, your local energy prices and policies, what kind of heating fuel you’d be replacing, and the HVAC contractor. 

  So there’s no simple answer to who will save money by getting a heat pump. We cover many different scenarios in depth in another article, but here are some rules of thumb.

  • Heat pumps tend to save money in warm climates. They’re super-efficient in mild weather, and could even cost less to install than a central air conditioner.

  • Heat pumps might save money vs. propane, electric resistance heat, and heating oil. Almost any well-installed heat pump should cost less to run over the course of a heating season than these expensive heating fuels. The heat pump might cost more to install in the first place, but you’ll often earn it back through energy savings.

  • Mini-split heat pumps usually save money on central cooling, if your home has no ductwork. Adding ductwork can be expensive and disruptive, and that’s before you add in the cost of a new ducted heat pump. Ductless mini splits tend to be easier and cheaper to retrofit, in that case.

  • Heat pumps often save money if you also go solar. If you have the means to install a home solar system that would produce enough electricity to offset most or all of your heat pump’s energy use, the cost of ownership can be very, very low.

  • Heat pumps often may not save money vs. natural gas heat in cold climates—but there are other ways to win. Gas is cheap, heat pumps often are not, and even cold-climate models lose efficiency as temperatures fall. But heat pumps can beat gas in some scenarios. If not, a hybrid / dual-fuel system could be the most economical option. Weatherizing your home can also help you save after switching to a heat pump.

  • Poorly installed heat pumps generally won’t save money. Bad ducts, oversized condensers, sloppy ductless designs, and other installation errors can stop heat pumps from working efficiently (and comfortably).

As of 2024, high-efficiency heat pumps qualify for a federal tax credit of up to $2,000. This credit is available to all taxpayers.

Larger federally funded heat pump rebates of up to $8,000 are currently available in at least one state, with more to come over the next few years. In general, these discounts will only be available through a select group of contractors, and the programs are aimed at low and moderate-income households.

Some state and local governments, as well as utility companies, also offer heat pump rebates. 

Learn more about the federal incentives here, and what kinds of local incentives might be available to you here.

Major environmental benefits and potential cost-savings aside, a high-performance inverter heat pump should feel like a major upgrade to your heating and cooling system. Here’s why:

• Inverter heat pumps (also called variable-speed heat pumps) are fantastic at holding steady temperatures and humidity levels. Traditional HVAC is either all the way on, or all the way off; inverter heat pumps adjust to heat or cool your home exactly enough to maintain the temperature on your thermostat. In the best-case scenario, a heat pump would run continuously for months. (They’re also at their most energy-efficient when they can run like this, too.)

• They’re quieter than most other HVAC systems, thanks to low fan speeds and quiet-by-design outdoor units. They’re a massive improvement over most window ACs, in particular.

• You don’t need to set back your thermostat at night to save energy. You still can, if you’d like. But high-performance heat pumps actually run most efficiently when you leave the thermostat alone.

• Your indoor air quality might improve, particularly with a ducted system. This isn’t unique to heat pumps, but HVAC systems that constantly move air—paired with a good filter—do a better job of capturing dust and other floating particles. The consistent humidity control helps, too. And you won’t have to worry about carbon monoxide leaks or byproducts of burning fossil fuels inside your home.

Heat pumps aren’t always a win for comfort. As with any type of HVAC system, some people have a bad experience with heat pumps—leaving their home chilly in the winter, or muggy in the summer, among other problems. It’s not the heat pump itself, though. It’s the way it was designed or installed, or something to do with your building. 

The same things that can hinder a heat pump’s energy efficiency—bad ducts, oversized condensers, sloppy ductless designs, and other installation errors—can also hinder a heat pump’s ability to keep you comfortable. Don’t overlook the role of decent insulation and air sealing, either. 

Worried that a heat pump will stop working in the case of an extreme cold-weather event? They’ve proven remarkably resilient so far. (Fossil-fuel systems often struggle in extremely cold weather, too.) You can always keep a backup system, for peace of mind.

There’s a whole HVAC language to describe all the different types of heat pumps and how they work. Here are some of the terms you’ll probably come across in your journey, defined briefly.

Mini-split 

It’s basically another name for a high-performance air-source heat pump: More efficient, more flexible, and more comfortable than basic duct-only systems. 

There’s some disagreement in the HVAC industry about the precise definition. A lot of people use “mini-split” and “ductless” interchangeably, though that’s not quite right.

Here’s a way to think about it: Ductless heat pumps are (almost) always mini-splits. But mini-splits aren’t always ductless—plenty of brands sell ducted systems that they call mini-splits, too. You don’t need to worry too much about the specifics, though. Mini-split is a marketing term more than a technical term.

Ducted / ductless

This tells you how a heat pump moves conditioned air around your home. They use the same underlying tech to generate warmth or cooling, but they deliver it differently. 

Ducted systems, naturally, connect to ductwork through an air handler that usually has a large fan.

In a ductless system, you’ll usually have one air handler (or “head”) per room, attached to the wall or ceiling, and connected to the outdoor unit by a long tube running through a 3-inch hole in the wall.

Air source / ground source / geothermal / water-source 

This tells you where the heat pump collects or rejects heat. Air-source heat pumps are by far the most common, practical, and affordable type of heat pump in the U.S. They look and mostly work like central ACs. When people talk about “heat pumps” broadly, they’re almost always talking about air-source heat pumps.

Ground-source heat pumps, sometimes called geothermal heat pumps, rely on hundreds of feet of tubing buried in your yard (instead of one mid-sized box installed next to your house). It’s a great technology if you can afford it and your property can accommodate it, though it’s a high-stakes purchase.

Water-source heat pumps work like ground-source systems, except the heat-exchanging tube sits in a body of water, usually a pond or lake. 

Air-to-air / air-to-water

These are subtypes of air-source heat pumps. Air-to-air systems distribute heating and cooling into your home through a forced-air system, either ductwork or ductless heads. Air-to-air heat pumps essentially replace a furnace and central AC.

Air-to-water systems distribute heat through hot-water radiator systems, essentially replacing a boiler. (Cooling is trickier.) Air-to-water is the norm in Europe, and while they’re not exactly common in the U.S., they’re available if you look hard enough.

Single-zone / multi-zone

These terms describe the number of air handlers or ductless “heads” connected to one outdoor unit. If it’s a simple one-head, one-compressor system, that’s a single-zone system. 

If multiple air handlers are connected to a single outdoor compressor, that’s a multi-zone system (sometimes called a multi-split). Single-zone systems are more efficient. But if you need HVAC for multiple rooms (and don't have ducts), it’s usually more practical to install a ductless multi-zone system. Most multi-zone heat pumps can accommodate up to five heads, though there’s some evidence that it’s better to stick with a maximum of three heads per outdoor unit. 

Warm weather / cold climate

Basic warm-weather heat pumps work very well until the temperature drops to about 32 Fahrenheit. In many parts of the U.S., it doesn’t get much colder than that very often, so basic heat pumps can get the job done (usually with some kind of simple, cheap backup). These are generally single-speed systems.

Cold-climate heat pumps can work well down to 0 Fahrenheit and below. The more often it drops below freezing where you live, the more it makes sense to look into a cold-climate heat pump. (They work well in milder temps, too.) These are almost always inverter-type heat pumps, or at least multi-speed systems.

Backup heat / heat strips / hybrid heat pumps / dual-fuel: 

These are all variations on the same basic idea: A secondary heating system that can take over for the heat pump. It’s almost always possible to rely entirely on a heat pump, but sometimes it’s more practical to keep another heater.

For the rest of this guide, we'll be focusing primarily on air-to-air heat pumps.

Don’t get too fixated on this. It helps to have a handle on what would make a heat pump a good fit for your home and local climate, but you’ll find that at least a handful of models will work well in your home and meet your heating and cooling goals.

Even if you identify what you think is the perfect heat pump, it might not be available when you want to install it. Or it’s not eligible for some rebate that you wanted. Or the installer instead offers an equally or almost-as-good option for a much better price. Or they might prefer to work with a different brand and will offer a better warranty for that equipment. It’s much more important to have a great installer and a well-designed HVAC system than to have the very best heat pump. If you keep up with basic maintenance

A good installation is the key to a great experience with a heat pump. Yes, you need the right equipment for the right house and the right climate. But a bad installation of even the best equipment can lead to sub-optimal efficiency, poor performance in cold weather, and reliability problems down the line.

When you first contact an HVAC contractor, they might be able to give you a general idea of what a heat pump installation could cost without visiting your home, if you can provide accurate details. But this is uncommon, and the huge majority of contractors will need to make a site visit. 

Site visits usually go like this:

• You schedule an appointment through the installer’s website, or over the phone. If it’s an emergency—your system dies during a cold snap—you can usually find a contractor who will arrive on the same day.

• When the contractor arrives, they’ll almost always start by having a conversation about your expectations. Some companies send a salesperson or consultant rather than an actual installer—somebody who has enough training to give you a quote but doesn’t perform the actual work. That’s OK, this is a common practice.

• Then you’ll do a walkthrough of your property with the contractor. 

• They’ll want to see your existing heating system and any ducts you’ve got in place. 

• They’ll also be looking for places to fit all the new equipment: The outdoor unit, the indoor air handlers, and the lines that connect the two parts. 

• They’ll also check out your electrical panel, to make sure it can support a heat pump. It's possible that you'll need some kind of electrical upgrade to support a heat pump.

• They (should) take some measurements along the way—room sizes, duct sizes, that kind of thing—to help figure out the heat pump size your home needs. Ideally, contractors would perform a blower-door test and try to measure your existing insulation for the best-possible sizing accuracy, but almost nobody does that.

• Most contractors try to design a good-enough system and give you a quote on the spot, but some will head back to their office and follow up with a quote later.

Learn more about what to look for in a good installer here.

A comfortable, efficient heat pump system starts with the installation. The EnergySage Marketplace makes it easy to get quotes from experienced, vetted heat pump contractors (in select areas).

Have more questions about heat pumps? When you sign-up (free of charge!) for the marketplace, we'll connect you with an EnergySage Energy Advisor—one of our in-house heat pump experts who can help guide you through the installation process.

And don't forget: When heat pumps run off of renewable, zero-emissions electricity from solar panels, they're even better for the environment and can even eliminate your heating and cooling bills entirely. The EnergySage Marketplace can help you find a top-quality solar installer in your area, too.