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Replacing your home’s heating, ventilation, and air conditioning (HVAC) system costs $7,500 on average in mid-2025, according to the home improvement site Angi. Prices will vary with such factors as home size, type of unit, and local climate.

Here, take a closer look at what’s involved in replacing your property’s HVAC system and how much it’s likely to cost.

HVAC System Parts

There are several ways to heat and cool a home that falls under the HVAC umbrella. Yet, most HVAC system parts and components can be grouped into the following categories.

Thermostat

Thermostats monitor temperature and can be used to adjust whether a HVAC system heats or cools a building. Generally, the temperature can be set manually or preset to regulate heating and cooling to a desired indoor temperature.

These systems can be connected to the HVAC system through wiring — or wifi in the case of smart thermostats. More advanced thermostats can be used to enhance comfort and efficiency by controlling temperature settings for multiple zones throughout a home or building.

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Heating and Cooling Unit

The heating and cooling unit is the main component of any HVAC system. Common types include furnaces, boilers, heat pumps, and air conditioners.

Furnaces are generally located inside a structure and comprise a heating element powered by gas, oil, or electricity and a blower to circulate heated air through the building.

Boilers are traditionally interior units, too, but circulate hot water or steam to radiators or baseboards located throughout the property.

Air conditioners include condenser units, which are located outside because they produce hot air through the heat transfer process. Another key component is the compressor, which pressurizes and circulates the refrigerant.

Heat pumps also consist of an external condenser, but a key difference is that they can be used to either heat or cool a home. These systems work in conjunction with an indoor blower unit to distribute heated or cooled air.

Filtration

HVAC systems incorporate air filters to remove dust, allergens, and other particles from entering the return-air duct. Usually, air is drawn from multiple locations inside a building to the HVAC system.

Whether filters are the reusable or disposable variety, periodic cleaning or replacement is necessary to maintain optimal performance.

Ultraviolet lights are another option for treating air quality in an HVAC system. Their ability to disinfect the air of mold and pathogens makes them helpful for some homeowners with severe allergies.

Delivery System

Most buildings and homes consist of multiple rooms and may include more than one floor. Distributing heated and cooled air throughout the space requires a system of ductwork and vents.

Many HVAC systems utilize separate supply and return ducts to circulate, filter, and treat air continuously. Supply ducts bring air from the heating and cooling unit to blowers and vents to heat or cool an area.

Meanwhile, return ducts transport untreated air back to the HVAC system.

Exhaust Outlet

Any HVAC system that involves combustion — burning oil, gas, or wood — will need an exhaust outlet to expel harmful fumes out of the building. An exhaust outlet can be its own vent or be connected to an existing chimney.


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HVAC System Cost Estimates

The type of unit chosen for replacement is a key determinant of cost. Prices may fluctuate whether a full or partial replacement is needed and based on technological advances in HVAC efficiency.

Cost estimates below account for the HVAC unit, any system parts, installation, and removal of old equipment.

Recommended: What Are the Most Common Home Repair Costs?

Boilers

Boilers have been used to heat buildings for more than a century and are found in homes and commercial buildings alike. The average replacement cost can range between $3,600 and $8,500 depending on the type of boiler. The average cost to replace a boiler is $5,908 as of mid-2025, according to Angi.

HVAC replacement cost for boilers can be higher if fuel tanks, piping, and gas hookup need to be repaired or installed.

Heat Pumps

Despite their name, heat pumps actually can be used to both heat and cool a building. These electric HVAC systems pull heat from outdoor air to heat a building even during cold weather conditions. When it’s warm out, heat pumps cool buildings by drawing heat from indoor air and expelling it outside.

Depending on the type of heat pump and size of the system (measured in tons), costs average between $8,000 and $15,000.

Air-source heat pumps typically run on the cheaper end of the heat pump spectrum, whereas ground source heat pumps (often called geothermal heat pumps) can cost between $4,500 and $26,600.

Although the upfront cost is significant, lower utility bills could make a heat pump a wise investment in the long-run.

Central Air Conditioners

Central air conditioners work by drawing moisture from the air inside a building and returning cooled air throughout the structure via ductwork. The system usually consists of one unit located outside but near the structure.

The average cost for installing central air is between $3,906 and $8,021, with an average of $5,959, according to Angi, as of mid-2025. Prices may be lower for 2-ton or smaller systems, while costs can creep higher if a building requires a 5-ton unit.

Besides the unit itself, the total footage of ductwork to be installed or replaced is a significant cost consideration.

Furnaces

The cost to buy and install a furnace can vary by energy type, total ductwork needed, and the model. On average, prices for replacing a furnace range from $2,800 to $6,800.

Furnaces that run on natural gas or electricity tend to be cheaper to replace than oil-fueled systems.

The total area that will be heated and how well a building is insulated are other factors that will affect the size of the system and potentially increase the cost.

Other HVAC Replacement Cost Factors

When evaluating HVAC options, the type of system is only part of the equation for determining the final price tag. There are many other factors that can affect how much an HVAC replacement will cost.

Local Climate

The popular real estate mantra, “location, location, location,” rings true for HVAC systems, too. Whether you live in a cold, warm, or temperate climate will have implications for how an HVAC system is designed.

Property owners in warmer climates could face higher prices for replacing air conditioning units since greater capacity is needed. Meanwhile, costs for furnaces can be higher in more frigid regions where heating efficiency is more important.

Building Characteristics

The size, layout, and condition of a building can play a role in HVAC replacement cost.

Excluding geographic influences, larger structures generally require a more substantial HVAC system to match. The total square footage can impact the price for filtration, ductwork, vents, and zones throughout a building.

A home’s design could also affect how much you’ll pay for HVAC installation. More difficult jobs can add additional labor hours and drive up the cost.

Some possible complications to consider are the ease of accessing components ductwork and whether building renovations will be needed to accommodate new HVAC equipment.

Unit Efficiency

The operational efficiency of a new system is another factor of HVAC replacement cost. Although more efficient units are generally more expensive upfront, they can recoup long-term savings through lower energy bills.

While browsing models, keep an eye out for an ENERGY STAR® label to identify the highest-performing HVAC systems. To become certified, this equipment has been vetted by the Environmental Protection Agency and Department of Energy.

For instance, air conditioner models that achieve efficiency scores in the top 25% among competitors are eligible for ENERGY STAR® certification.

Paying for HVAC Replacement

The upfront cost of paying for HVAC replacement can be steep. If covering expenses with cash and savings alone isn’t feasible, there may be other ways to finance this kind of project. For example, you could look into a home equity loan or line of credit, both of which tap the equity you have in your home. These options require using your home as collateral, however, which not all homeowners will be comfortable with.

Another option is a home improvement loan, which is a kind of personal loan. With this type of unsecured loan (in other words, no collateral needed), you get a lump sum of cash, which you pay back in installments with interest. The loan term is usually between one or two years and seven years, and the interest rate for a personal loan is typically lower than what you’d pay with a credit card.

One other consideration: The HVAC unit cost for more environmentally friendly technologies, such as ground- and air-source heat pumps, may be eligible for rebates and tax incentives.

Recommended: Home Improvement Cost Calculator

The Takeaway

Replacing your home’s HVAC system costs, on average, $7,500 as of mid-2025. The exact price tag will depend on the unit you choose, the size of your home, your location, the complexity of installation, and other factors.

If replacement is necessary for your HVAC system, you may still have a sizable sum to pay after claiming amu tax credits or manufacturers’ rebates you might qualify for. Financing options include secured funding that draws on your home’s equity or an unsecured home improvement loan.

Think twice before turning to high-interest credit cards. Consider a SoFi personal loan instead. SoFi offers competitive fixed rates and same-day funding. See your rate in minutes.

FAQ

How much does it cost to replace an entire HVAC system?

Currently, the average cost to replace an HVAC system is $7,500 on average. Prices will vary depending on the kind and size of unit you purchase, your location, installation challenges, and other factors.

How often do HVAC systems have to be replaced?

Typically, an HVAC system lasts 10-20 years, though the details can vary depending on your particular situation.

What is the most expensive part of an HVAC system?

The most expensive part of your home’s HVAC system is often the compressor, which compresses the refrigerant and plays a key role in the cooling process.

Photo credit: iStock/South_agency

SOPL-Q225-085

A high-yield bond, often called a junk bond, is debt issued by a corporation that has failed to achieve the credit rating of more stable companies. Though they tend to be high-yield, they’re also relatively high-risk, in most cases.

All investments fall somewhere along the spectrum of risk and reward. In order to increase the chance at a higher reward, an investor must generally increase risk. High-yield bonds are no exception and have a higher likelihood of default than investment-grade bonds. That’s why they are also often called “junk bonds.”

Overview of the Bond Market

Bonds are popular with investors for being mostly lower risk than stocks. The bond market works in such a way that it’s made up of a wide asset class that are essentially investments in the debt of a government — federal or local — or a corporation.

They are packaged as a contract between the issuer (the borrower) and the lender (the investor). With bonds, you are acting as both the lender and the investor. That’s why bonds are also referred to as debt instruments, and a key component in how bonds work.

The rate of return that an investor makes on a bond is the rate of interest the issuer pays on their debt plus the increase in value when the bond is sold from when it was purchased. You may hear the interest rate on a bond referred to as the coupon rate. Most bonds make interest payments — coupon payments — twice annually.

You’ll also hear bonds commonly referred to as fixed-income investments. That’s because the interest on a bond is predetermined and will not change, even as markets fluctuate. For example, if a 20-year bond is issued with a 3% interest rate, that interest rate is set and will not change throughout the life of that bond.

Although the interest rate on the bond does not change, the underlying price of the bond can change. Therefore, it is possible to experience negative returns with a bond investment. Bond prices may also retreat in an environment of rising interest rates — this is called interest rate risk.


💡 Quick Tip: When people talk about investment risk, they mean the risk of losing money. Some investments are higher risk, some are lower. Be sure to bear this in mind when investing online.

What Is a High-yield Bond?

As you might expect, high-yield bonds are bonds that pay a high relative rate of interest. Why might a bond pay a higher rate of interest? Most commonly, because there is a higher degree of risk associated with the bond. Hence, the “junk bond” moniker.

The trade-off is that less-risky bond investments typically tend to have a lower yield. Therefore, bonds with lower credit ratings generally must offer higher coupon rates.

In addition to classifications by type (corporate, Treasury, and municipal bonds), bonds are graded on their riskiness, which is also known as their creditworthiness.

A default can occur when the issuer is unable to make timely payments or stops making payments for whatever reason. In some cases of default, the principal, or the amount initially invested, cannot be repaid to the lender (i.e., the investor).

Credit Rating Agencies and Junk Bonds

There are two main credit-rating agencies: S&P Global Ratings, and Moody’s.

Each has its own grading system. The S&P rating system, for example, begins at AAA, which is the best rating, and then AA, A, BBB, and so on, down to D. Bonds that are ranked as a D are currently in default and C grades are at a high risk of default.

Using S&P’s system, high-yield bonds are generally classified as below a BBB rating. These bonds are considered to be highly speculative. Bonds at a BBB rating and above are less speculative and sometimes referred to as “investment grade.” With Moody’s rating, high-yield bonds are classified at a Baa rating and below.

This means that bonds with better credit ratings are generally the ones that are least likely to default. Treasuries and corporate bonds issued by large, stable companies are considered relatively low-risk, and highly unlikely to default. These bonds come with a AAA rating.

Fallen Angels in the Bond Market

Fallen angels are companies that have been downgraded from a higher investment-grade credit rating to junk-bond status. Diminished finances, as well as a tough economic environment, could send a company from the coveted investment-graded status to junk.

Rising Stars in the Bond Market

A rising star is a junk bond that has potential to become investment grade due to an improved financial position by the company. A rising star could also be a company that’s relatively new to the corporate debt market and therefore has no history of debt. However, analysts at credit-rating firms may judge that the company has high creditworthiness due to its finances or competitive edge.

Junk Bonds: Pros & Cons

It’s up to each investor to decide if high-yield bonds have a place in their portfolio. Here are the pros and cons of high-yield bonds so you can make a decision about whether to integrate them into your overall investment strategy.

5 Pros of High-yield Bonds

Here’s a rundown of some of the pros of high-yield bonds.

1. Higher Yield

High-yield bond rates tend to be higher than the rates for investment-grade bonds. The interest rate spread may vary over time, but high-yield bonds having higher rates will generally be true or else no investor would choose a higher-risk bond over a lower-risk bond with the same rate.

2. Consistent Yield

Even most high-yield or junk bonds agree to a yield that is fixed and therefore, predictable. Yes, the risk of default is higher than with an investment-grade bond, but a high-yield bond is not necessarily destined to default. A high-yield bond may provide a more consistent yield than a stock, which is a key thing to know when researching bonds vs. stocks.

3. Bondholders Get Priority When Company Fails

If a company collapses, both stockholders and bondholders are at risk of losing their investments. In the event that assets are liquidated, bondholders are first in line to be paid out and stockholders come next. In this way, a high-yield bond could be considered less risky than a stock for the same company.

4. Bond Prices May Appreciate Due to Credit Rating

When a bond has a less than perfect rating, it has the opportunity to improve. This is not the case for AAA bonds. If a company gets an improved rating from one of the agencies, it’s possible that the price of the bond may appreciate.

5. Less Interest-Rate Sensitivity

Some analysts believe that high-yield bonds may actually be less sensitive to changes in interest rates because they often have shorter durations. Many high-yield bonds have 10-year, or shorter, terms, which make them less prone to interest rate risk than bonds with maturities of 20 or 30 years.

4 Cons of High-Yield Bonds

Here are some of the cons of high-yield bonds.

1. Higher Default Rates

High-yield bonds offer a higher rate of return because they have a higher risk of default than investment-grade bonds. During a default, it is possible for an investor to lose all money, including the principal amount invested. Unstable companies are particularly vulnerable to collapse, especially during a recession. The rating agencies seek to identify these companies.

2. May Be Difficult to Sell

If an investor invests directly in high-yield bonds, they may be more difficult to resell. In general, bond trading is not as fluid as stock trading, and high-yield bonds may attract less demand or have smaller markets, and therefore, may be harder to sell at the desired price, or at all.

3. Bond Price May Depreciate Due to Credit Rating

Just as a bond price could increase with an improved rating, a bond price could fall with a decreased rating. Investors may want to investigate which companies are at risk of a lowered credit rating by one of the major agencies.

4. Sensitive to Interest Rate Changes

All bonds are subject to interest rate risk. Bond prices move in an inverse direction to interest rates; they can decrease in value during periods of increasing interest rates.

How to Invest in High-yield Bonds

There are two primary ways to invest in junk bonds: by owning the bonds directly and by owning a pool of bonds through the use of mutual funds or exchange-traded funds (ETFs).

By owning high-yield bonds directly, you have more control over how your portfolio is invested, but it can be difficult for retail investors to do this. Brokerage firms typically allow sophisticated investors to directly own junk bonds, but even then it could be labor-intensive and a hassle.

Investing in high-yield bond mutual funds or ETFs, on the other hand, may allow you to diversify your holdings quickly and easily.

Junk-bond funds may also allow you to make swift changes to your overall portfolio when needed; they might be more economical for smaller investors; and they allow you to invest in multiple bond funds if desired. It’s important to check both the transaction costs and the internal management fee, called an expense ratio, on your funds.

Do Junk Bonds Fit Into Your Investment Strategy?

The only way to truly determine whether junk bonds are a good or suitable fit for your portfolio and investment strategy is to sit down and take stock of your full financial picture. It may also be worthwhile to consult with a financial professional for guidance.

But generally speaking, junk bonds are likely going to be a suitable addition to your portfolio if you’ve already covered all, or most, of your other bases. That is, that you’ve built a diversified portfolio, and are taking your risk tolerance and time horizon into account. In that case, having some room to “play” with junk bonds may be suitable — but again, a financial professional would likely be able to provide some guidance.

If you’re a beginner investor, or someone who’s trying to build a portfolio from scratch, junk bonds are probably not a good fit. If you’ve been investing for years and have a large, diversified portfolio? Then adding some junk bonds or other high-risk investments to the mix probably wouldn’t be nearly as big of an issue.

Other Higher-Risk Investments

Junk bonds are high-risk investments, but they’re far from the only ones. Here are some other types of relatively high-risk investments to be aware of.

Penny Stocks

Penny stocks are stocks with very low share prices — typically less than $5 per share, and often, under $1 per share. While these stocks have the potential for huge gains, they’re also very risky and speculative. As such, they may be considered the “junk bonds” of the stock market.

IPO stocks

Another type of high-risk stock is IPO stocks, or shares of companies that have recently gone public. While an IPO stock may see its value soar immediately after hitting the market, there’s also a good chance that its value could fall significantly, which makes IPO stocks a risky investment.

REITs

REITs, or real estate investment trusts, allow investors to invest in real estate assets without actually buying property. But the real estate market has significant risks, which filter down to REITs and REIT shareholders. That, like the aforementioned investments, makes them risky and speculative.

The Takeaway

High-yield bonds, or junk bonds, are debt instruments issued by a corporation that has failed to achieve the credit rating of more stable companies. Though they tend to be high-yield, they’re also very risky in most cases. That doesn’t mean that they don’t necessarily have a place in an investor’s portfolio, however.

While companies that issue high-yield bonds tend to be lower on a scale of creditworthiness than their investment-grade counterparts, junk bonds still tend to have more reliable returns than stocks or nascent markets like cryptocurrencies.

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FAQ

What is considered a junk bond?

A junk bond describes a type of corporate bond that has a credit rating below most other bonds from stable companies. The low credit rating tends to mean they’re riskier, and accordingly, pay higher yields.

Are high yield bonds good investments?

Generally, no, high-yield bonds or junk bonds are not good investments, mostly because they’re risky and speculative. Again, that doesn’t mean that there isn’t necessarily a place for them in a portfolio, but investors would do well to research them thoroughly before buying.

Which bonds give the highest yield?

High-yield bonds, or junk bonds, tend to give investors the highest yield. These are risky bonds issued by corporations, and have low credit ratings. As such, they’re speculative investments.