Heating Your Home 101

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What Is a Furnace and How Does It Work?

What Is a Furnace and How Does It Work?
11 mins

Class 1 of 5


Single-Stage, Two-Stage and Modulating Furnaces

Single-Stage, Two-Stage and Modulating Furnaces
6 mins

Class 2 of 5


What's an AFUE Rating?

What's an AFUE Rating?
4 mins

Class 3 of 5


Heat Pump vs. Furnace: Which System Is Right For You?

Heat Pump vs. Furnace: Which System Is Right For You?
10 mins

Class 4 of 5


How Much Does a New Furnace Replacement Cost in 2024?

How Much Does a New Furnace Replacement Cost in 2024?
9 mins

Class 5 of 5

What Is a Furnace and How Does It Work?

We answer the question of what is a furnace. We go over the basics of how furnaces work, and compare and contrast the different types of furnaces. From low-efficiency to high-efficiency, different blower types and gas vs. electric, we break down the mechanics and characteristics.

What Is a Furnace and How Does It Work?

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Joshua Rodriguez


June 24th, 2021

During the winter, your furnace helps to ensure your family’s comfort and safety.

Hopefully, it just does its job quietly and without fuss. Be thankful if the only times you need to worry about it is when it needs its yearly maintenance, or if you’re getting ready for the winter months and want to ensure it’s performing at its full potential.

But maybe you’re starting to think about a replacement for your 15-year-old (or older) furnace. Maybe you’re in the market for a unit that’s more efficient, more environmentally friendly. Maybe you’re just tired of shivering in December due to a lack of truly warm air.

If you are thinking long and hard about your existing furnace, here is a primer on furnaces. After all, you should be as knowledgeable as possible when you sit down with a salesperson to discuss options.

The more you know, the better your questions. The better your knowledge, the better your understanding of your options.

So let’s start with some of the basics.

4 Types of Furnaces

According to HVAC.com, furnaces can be classified into five general categories:

  • Natural draft
  • Forced-air
  • Induced-draft
  • Condensing


Natural draft furnaces are an older type of furnace, now considered to be an energy hog. Their estimated efficiency rating was between 65 and 70 percent AFUE. (An AFUE rating describes how much of the fuel your furnace uses actually goes towards providing heat for your home.).

 The system had no blower, but some of the furnaces were later adapted to use electric blowers to aid air distribution. Natural draft furnaces usually have pilot lights.


In old forced-air furnaces, heat was provided by a cast-iron or sectional steel heat exchanger. Heated air was moved by blowers, which ran at a wide range of speeds. Energy efficiency would range anywhere from just over 50% to upward of 65%. Newer forced-air furnaces are much more efficient.


Like your blower motor, a draft inducer in an induced-draft furnace is a motor that controls airflow. The furnace’s draft inducer motor plays two roles:

  • The draft inducer pulls in air for combustion
  • The draft inducer helps get rid of byproducts of combustion, such as carbon monoxide.


Modern units are condensing furnaces that also use forced air. Air is forced (through forced-draft) through the system with a blower. A condensing furnace is also known as a high-efficiency furnace. It has a secondary heat exchanger that extrapolates more heat.

The reason it’s called a condensing furnace is because, since it pulls more heat out through that secondary heat exchanger, the byproduct, the carbon monoxide, is cooler. As the gas is escaping, it starts to condense because it’s cooling quickly. That then creates condensation, which goes out of the furnace as water to wherever the drain is.

There are also boilers

Basically, a boiler system heats water. Boilers are typically 40-50 years old. They distribute heat by pumping hot water through small pipes to heat baseboards, cast iron radiators, or radiant flooring systems. Some people I talk to love their boiler system because it does produce a really nice heat.

For the sake of simplicity, we’ll spend the rest of this article talking about just condensing, forced-air furnaces. The main components are the burners, the heat exchanger, and the blower motor. The heat exchanger is what extrapolates the heat. There’s combustion from the burners, and as it runs through that heat exchanger, it’s pulling out the heat. The ductwork and the blower motor force the air throughout the house.

A furnace

Advantages of a Condensing Furnace

The one major advantage a condensing furnace has over a standard forced-air furnace is efficiency. A non-efficient furnace operates at around 80%. With high-efficiency, you’re going to get 90% efficiency. Most of them are 96%.

What does 90% efficiency mean?

The easiest way to think about it is for every dollar you spend to heat your home, you are using 90% of it, and you have 10% waste. For every dollar, you’re using 90 cents and wasting 10 cents. The same conversion would go for an 80% efficient furnace: 80-20.

At 90% efficiency, you are wasting less energy and getting more efficiency. It’s an 80% furnace with the addition of a secondary heat exchanger, which pulls more heat.

A possible disadvantage of a high-efficiency furnace would be if you're replacing a standard-efficiency furnace with a high-efficiency one, and your existing unit is in the middle of your house, and you have a beautiful finished basement.

If the old vent goes up to the roof, you would have to tear up drywall in the basement to make the new pathway for the PVC pipe to run to the outside of the house. A high-efficiency furnace needs to be vented to an exterior wall, not the roof.

Single-Stage, Two-Stage, Variable-Capacity

Three Types of Fans

  • Single-stage
  • Two-stage
  • Modulating

A single-stage furnace has only one stage of operation; it is either on or off. This means that it is always running at the highest speed and always pumping out the air at the highest velocity.

One of the benefits of a single-stage furnace is typically the cost for installation. Single-stage furnaces are relatively inexpensive since the technology is rather simple. However, the simplicity of single-stage gas furnaces comes at the cost of louder blower motor noise and inefficiency of the unit. The blower motors on these single-stage furnaces consume more energy overall, especially compared to its cousins: the two-stage and the modulating.

A two-stage furnace, as its name implies, has a fan that can run at full speed and reduced speed. A two-stage furnace will run at 60-65% of the BTU (BTU refers to the British Thermal Unit, and is a measure of heat) capacity, and then it can go to 100% on the second stage. You basically have warm heat first, and then hot heat. 

They are quieter and will better keep the desired temperature in the house.

The two-stage system also has a longer run cycle. This allows more time for the air to distribute or more time for changeover, when you’re pumping the warm air in and then removing the cool air. You get more of that change throughout the home, which is how you get the conditioned, warm air.

A modulating furnace’s fan can modulate the heat output and air velocity nearly continuously, depending on the demanded heat and outside temperature. This means that it works only as much as necessary and therefore saves energy.

A modulating gas valve furnace can basically run anywhere between 40% and 100% of capacity. It’s able to give you the most comfortable heating throughout your home. It’s going to keep you the most consistent, and eliminate temperature spikes. There are a lot of people who want it to be 70 degrees in their home year round. Those are the people who are candidates for a modulating system.

These are the priciest option, but are also the most efficient, and can save money over the long haul.

A furnace.

Does a High-Efficiency Furnace Eventually Save You Money?

There’s not a black-and-white answer. There are some people, maybe their gas bill is only $60 a month. With a high-efficiency furnace, you’re saving 16 cents on the dollar, it’s going to take a long time to recoup that upfront cost of a new unit.

Now, if you know you’re going to be in the house long-term (say, 10 years or longer), and maybe you’re in a bigger house and your bills are $150 for gas and you’re saving 16 cents on the dollar, you’re going to start recouping that cost quicker.

Another factor that might influence you to buy a high-efficiency furnace is that a lot of people are more conscious of their carbon footprint. Some people want to have less effect on the environment. I used to jokingly tell people, “Hey, look, the savings aren’t really there unless you’re here for ten-plus years, so if you purchase this, you’re going to get a little sticker with a smiley face that says ‘I did something good for the environment today.’”

When Might an 80% Efficient Furnace Be Recommended?

It depends. Some people have high efficiency furnaces already. So if you have a high efficiency furnace, it doesn’t do any good to go backward, and it might even be impossible. Now, if you have an older house, and have a high-efficiency furnace, which someone converted from a standard 80% to a high-efficiency furnace, I guess technically you could go back to an 80 if you really wanted to.

For the most part, if you have a high efficiency furnace, there’s no reason to go backwards.

Air Handlers Versus Furnaces

The furnace is a source for natural gas heating, and an air handler is a fan. It’s just a blower motor, and it has a coil for cooling. Now, if you use an all-electric system for your heating source, you’d have an air handler with electric heat strips, which some people refer to as emergency or back-up heat. So the electric heat strips provide heat once the heat pump outside can't keep up due to the cold temperatures.

A furnace flame.

Electric Furnaces Versus Gas Furnaces

An all-electric system would be an air handler, which some people refer to as an electric furnace. It has  electric heat strips inside the unit, and is commonly paired with a heat pump. In this set-up, the heat pump is essentially an air conditioner with a reversing valve so that it can produce heat.

Heat pumps can heat only to a certain point, typically around 40 degrees. Lower outdoor temperatures cause them to lose their heating efficiency. At that point, the HVAC system will start to rely on the back-up heat strips to make up that difference in temperature.

Gas is way more efficient than electric. Electricity costs a lot more than natural gas. But some people just don’t have gas, so they can’t heat their home with anything except electric heating. Depending on where you live, the gas company can run gas to your home. Typically, they will do it up to a certain distance for free, and then the remaining distance it would be up to the customer to pay for.

If you convert from electric to gas, your initial investment is going to be more. Maybe we have to add a gas line. Sometimes duct modifications are needed.

How do we Determine the Recommended Size Furnace?

We at Fire & Ice determine the size of a replacement furnace should be by completing what’s called a load calculation. It is the only way to accurately determine the right-sized equipment that goes into the home. A load calculator for us comprises measuring the windows, determining the direction of the windows. We count the number of doors. We measure the thickness of the walls, which gives us an idea of the amount of insulation there, as well as the insulation that’s in the attic. Some homes are on a slab, some are over a crawl space, others are over a basement.

All of those factors go into the equation, as well as the square footage of the home and number of occupants. The form that we use is the Manual J Short Form.

It matters because that is the correct way to determine the size of the system. If your system is too big or t0o small, it will obviously affect your energy cost.

If it’s too big, it will do something called short cycling. The furnace fires on, the thermostat thinks that the temperature is satisfied, and so the furnace shuts off. Once the air mixes a little bit more, it fires on again. It runs for a few minutes, it’s off for a few minutes. That is a tell-tale sign the furnace is oversized. It doesn’t have the proper amount of run time for the air to mix and provide the type of even temperature distribution. It wears out the system quickly.

If it’s undersized, you obviously have the problem that it’s never going to keep up with the outside temperature. It’s going to run all of the time, putting on unnecessary wear and tear. It will wear out much sooner than if it were sized correctly to begin with.

And you’ll constantly be cold and uncomfortable.

Next Steps

I hope we’ve given you some answers to your potential questions about furnaces. We are more than happy to meet with you in person to go over more specifics. Meanwhile, here’s a list of recommended reading:

Recommended reading about furnaces:
Furnace Troubleshooting: Common Heating Problems & Repairs
How Much Does a Furnace Repair Cost in 2021?

How Does a Furnace Work?
How Much Does a New Furnace Replacement Cost in 2021?

The Complete Guide to Home Furnaces

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