Perhaps you’re looking into a new furnace to keep you warm this winter. Many homeowners in this situation are surprised at the number of available options. They wonder, “What are the different types of furnaces, and which one is right for my home?”
Furnaces are available in many shapes, sizes, and efficiency ratings. The best choice will come down to your home’s size, your budget, and your available fuel sources. To find the perfect fit, it helps to understand how they differ.
In this guide, we break down the options by Fuel Type (what they burn), Performance (how they operate), and Efficiency (how much energy they save) so you can make the right investment
Categorizing Furnaces by Fuel Type
The first way to filter your options is by fuel type. Before you worry about features or brands, you need to determine which fuel source your home is set up to utilize. Here are the five most common fuel configurations.
Natural Gas Furnaces
The most popular choice in the U.S., these furnaces burn natural gas delivered via municipal underground lines.
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Pros:
Highly efficient (modern models reach 90-98% AFUE); fuel is relatively inexpensive; heats homes quickly.
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Cons:
Requires access to a municipal gas line; generates carbon monoxide (requires proper venting).
Propane Furnaces
Propane furnaces operate similarly to gas furnaces, but they are fueled by liquid propane stored in a tank.
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Pros:
A great alternative for rural areas without natural gas lines; highly efficient; cleaner burning than oil.
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Cons:
Requires a storage tank; propane costs can fluctuate.
Electric Furnaces
These units use electric resistance coils to generate heat, functioning much like a giant hair dryer. They do not require a flue, chimney, or gas line.
Unlike gas systems, there is generally only one “type” of electric furnace (resistance heating). However, many homeowners looking for high-efficiency electric heating also consider Heat Pumps.
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Pros:
Lowest upfront cost; no carbon monoxide risk; quiet; minimal maintenance.
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Cons:
Electricity is often more expensive than gas, leading to higher monthly bills. Also, they can struggle to heat large homes in extreme cold.
Oil Furnaces
Oil furnaces are not very common anymore, but they can still be found in older homes or rural areas without gas access. These units burn oil stored in a tank on the property.
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Pros:
Produces powerful heat; tanks can be installed anywhere.
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Cons:
Requires on-site fuel storage; oil prices can be volatile; requires more frequent maintenance than gas or electric units.
Hybrid (Dual Fuel) Systems
A hybrid system combines a gas furnace with an electric heat pump. The system automatically switches between the two depending on which is most efficient for the current outdoor temperature.
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Pros:
Maximizes energy savings year-round; eco-friendly.
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Cons:
Higher installation cost.
While the fuel type is largely determined by your home’s location and infrastructure, the way the furnace uses that fuel is a choice you can make. This brings us to the performance options.
The Different Types of Gas Furnaces
Once you have decided on a fuel source, you must decide how the furnace operates. When people ask about the “different types of gas furnaces,” they are usually referring to the valve stages (or speeds).
The following three categories determine how consistently your home stays warm and how much energy you use to get there:
Single-Stage Gas Furnaces
This is the most basic type of furnace. It has only two settings: “On” and “Off.” When it’s on, it runs at 100% capacity until your thermostat reaches the desired temperature, then it shuts off completely.
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Pros:
Lowest upfront cost; reliable technology; easy to install.
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Cons:
Less energy-efficient; can cause “hot and cold spots” in the home; louder operation.
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Best For:
Budget-conscious homeowners or milder climates where the furnace doesn’t run constantly.
Two-Stage Gas Furnaces
Two-stage furnaces have two settings: High (100%) and Low (usually 60-70%). The furnace runs on the lower, energy-saving setting for most of the day to maintain your indoor temperature. It only kicks into “High” gear during extreme cold snaps.
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Pros:
More consistent comfort; quieter operation; better energy efficiency than single-stage models.
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Cons:
Higher upfront cost than single-stage units.
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Best For:
Homes in regions with fluctuating winter temperatures (like Indiana).
Modulating (Variable-Speed) Gas Furnaces
These are the gold standard of modern heating. A modulating furnace can adjust its heat output in tiny increments (often as small as 1%) to precisely match your home’s heating needs. It runs longer at very low speeds, providing a continuous stream of warm air.
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Pros:
Highest efficiency (up to 98% AFUE); incredibly quiet; eliminates temperature swings; improves indoor air quality by constantly filtering air.
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Cons:
Highest initial investment.
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Best For:
Homeowners who want maximum comfort and the lowest possible monthly utility bills.
Choosing the right stage is vital for comfort, but there is one final metric you need to check to understand exactly how much money you will save: the efficiency rating.
Categorizing Furnaces by Efficiency (Standard vs. High-Efficiency)
Finally, you can categorize furnaces by how much of the fuel is actually converted into heat. This is measured by AFUE (Annual Fuel Utilization Efficiency).
While every furnace has an AFUE rating, the industry generally splits them into two distinct “types” based on their internal construction.
Standard Efficiency Furnaces (80% AFUE)
These are traditional units often found in older homes. For every dollar you spend on gas, 80 cents heats your home and 20 cents is lost up the chimney.
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The Difference:
They use a simple metal flue and have only one heat exchanger.
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Best For:
Tight budgets or mild climates where you don’t run the heat often.
High-Efficiency “Condensing” Furnaces (90-98% AFUE)
These modern units are designed to squeeze every last drop of heat from the fuel.
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The Difference:
They utilize a secondary heat exchanger to capture escaping heat from the exhaust gases. Because they extract so much heat, the exhaust turns into water (condensate) and is drained away, requiring PVC venting instead of a metal chimney.
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Best For:
Homeowners planning to stay in their home for 5+ years who want to lower their monthly bills.
While Standard Efficiency (80%) units are still available today, federal regulations are shifting toward higher standards. Investing in a 95%+ unit now “future-proofs” your home and maximizes resale value.
Which Furnace Is Right for You?
With so many variables, making the final call can be difficult. To simplify the decision, we recommend weighing these three primary factors:
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Your Climate:
If you live somewhere with harsh winters, A Two-Stage or Modulating Gas Furnace is often the smartest choice to handle the cold efficiently without overworking the system.
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Your Budget:
If upfront cost is the main concern, a Single-Stage unit is a viable, reliable option. However, if you want to save money over the 10-15 year lifespan of the unit, investing in a High-Efficiency model often pays for itself.
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Your Home:
Larger homes benefit significantly from the even heating of Variable-Speed blowers, which help push air to distant bedrooms that might otherwise stay cold.
These are just general guidelines. For personalized guidance, it’s best to ask a certified HVAC professional. If you are in our service area, we’d be happy to assist you. Visit our Heating Services page for an idea of what to expect when working with us.
Call Siemer Heating, Cooling & Plumbing for a Free Estimate
Still unsure which type is best for your home? You don’t have to guess. Schedule a preliminary visit with one of our Siemer Heating, Cooling & Plumbing specialists. We will audit your home to determine the exact size and type of furnace you need to stay warm without overspending.
Call us or request service online to upgrade your comfort today.
