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Ways to help pay for a new high-efficiency furnace or boiler

9/15/2016 3:43:18 PM

If your heating system is old, worn out, or inefficient, the most cost-effective solution may be to replace it with a new high-efficiency model.

Most furnaces have a useful life of 15-20 years, and most boilers will last 20-30 years. As your furnace or boiler nears the end of its expected life, start planning your replacement strategy, including what to buy and how to pay for it.

If you’ve made the decision to buy a new heating system, here are several sources to help pay for it:

  • Loans. The Lending Center at the Center for Energy and Environment (CEE) offers the Home Energy Loan Program for Minnesota homeowners to make energy improvements. It offers secured loans of up to $20,000 (4.99% fixed rate, 10-year terms, no income max limit) and an Unsecured Home Energy Program with unsecured loans of up to $15,000 (4.99% fixed rate, 10-year terms, no income max limit). Minnesota Housing Finance Agency offers similar loans via its Fix Up Program.
  • Residential Energy Efficiency Tax Credit. A federal tax credit of $150 is available for ENERGY STAR®-certified natural gas, propane, or oil furnaces or hot water boilers purchased by Dec. 31, 2016.
  • Utility rebates. Many utilities offer rebates for high-efficiency heating systems. For example, Xcel Energy currently provides a $300 rebate for a new furnace with an annual fuel utilization efficiency (AFUE) rating of 96%. Check the Utility Rebate Finder from Energy Smart to see what your utility provides, or contact your utility directly.
  • Manufacturer’s rebate. Some heating system manufacturers may offer rebates on certain models. Check with your HVAC installer.

Most of the incentives (rebates, loans, grants, tax credits) are compiled on the Database of State Incentives for Efficiency and Renewables (

Low-income Minnesotans who qualify for the /commerce/consumers/consumer-assistance/weatherization/index.jspWeatherization Assistance Program (800-657-3710) may receive energy upgrades such as furnace, boiler, and water heater repair or replacement.

For more information on home heating systems—including maintenance and repair tips and when to replace units—see the Home Heating section of the Home Energy Guide (pdf). 

Minnesota Energy Tips is provided twice a month by the Minnesota Department of Commerce, Division of Energy Resources. Contact the division’s Energy Information Center at or 800-657-3710 with energy questions.

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