Updated: November 19, 2025
Written by Dan Simms
Nieves is a home remodeling editor at Fixr.com with special interest in landscaping, pest control, painting, installation, and repair projects. She brings her work ethic, creativity, and love for teamwork into everything she does, including working with writers and designers at Fixr.com to develop useful and comprehensive guides for homeowners.
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A geothermal heat pump is a piece of HVAC equipment that uses electricity to condense and evaporate refrigerant to move heat between your home’s interior and exterior. Unlike air-source heat pumps, which exchange heat with the air outside, a geothermal heating system exchanges heat with the ground, which maintains a constant temperature at depth. Geothermal heat pumps are extremely efficient, help reduce energy costs, and are environmentally friendly.
The average cost to install a geothermal heat pump system is $17,300, and most homeowners pay somewhere between $12,000 and $32,000. Prices depend mostly on the size of the heat pump unit you need to serve your home, the type of ground loop you choose or have room for, and the cost of local labor in your area.
Geothermal Heat Pump Installation Cost
Residential Geothermal Heat Pump Cost by System Type
There are two primary types of geothermal heat pumps: closed-loop systems and open-loop systems. Closed-loop systems are far more common but are more expensive to install. They use a self-contained refrigerant through underground pipes to transfer heat. Open-loop systems use groundwater to transfer heat and discharge it back to the environment after use.
Closed-loop systems may include horizontal loops and vertical loops. Some people include pond or lake loop systems as another geothermal energy option, although these are technically water-source heat pumps.
Type of System | Geothermal Heat Pump System Cost |
Open-loop | $10,000 – $35,000 |
Pond/lake loop | $10,000 – $45,000 |
Horizontal loop | $15,000 – $50,000 |
Vertical loop | $20,000 – $70,000 |
Open-Loop
An open-loop geothermal heat pump doesn’t contain refrigerant and instead uses pumps to move groundwater through an open loop. Since groundwater maintains a constant temperature and water has a high specific heat capacity, it’s an efficient way to transfer heat. This system is the most affordable, at between $10,000 and $35,000, but it’s not legal everywhere and requires abundant groundwater and a safe area for water disposal.
Pond/Lake Loop
Pond loop geothermal heat pump systems are often open-loop systems, but they can also contain closed loops. Most people consider the closed-loop option a water-source heat pump rather than a ground-source heat pump. Pond or lake loop systems cost between $10,000 and $45,000. These are suitable for homeowners with access to abundant groundwater.
Horizontal Loop
Horizontal loop systems are the most common form of closed-loop, ground-source heat pump. They use large coils that travel across your property at a depth of 4 to 6 feet, where the temperature of the soil is constant. These systems require large property sizes to accommodate the coils, and they require a lot of excavation, which contributes to their higher overall cost. These total between $15,000 and $50,000, in most cases.
Vertical Loop
Vertical loop systems use a single, deep well on your property to place coils rather than relying on wider, shallower excavation for horizontal coils. These are best for homeowners on smaller properties who don’t have space for a horizontal loop, or those who want minimal disruption to their lawn. Vertical loops are more expensive, though, as they require specialized equipment to dig wells down to between 100 and 400 feet deep. They cost between $20,000 and $70,000.
Cost Factors
The type of geothermal heat pump you choose will play a major role in your upfront project costs, but there are many other things to consider to get an accurate, all-in estimate for your project.
Capacity (Tonnage) and Home Size
It’s important to size your geothermal heat pump properly for your home. Heat pumps are sized by the ton, with one ton being about equal to 12,000 British Thermal Units (BTUs). The average 1,800-square-foot home requires a system with a capacity between 2 and 3 tons. You can use the table below to get an idea of the size you need and what it will cost to install.
Home Size (Sq.Ft.) | Heat Pump Size (Tons) | Typical Cost |
1,000 | 1.5 | $3,000 – $12,000 |
1,500 | 2 | $5,000 – $20,000 |
2,000 | 3 | $7,500 – $28,000 |
2,500 | 4 | $10,000 – $36,000 |
3,000 | 5 | $12,500 – $50,000 |
It’s important to note that the numbers above are just averages. What size heat pump you need depends on many factors, including your home’s square footage, your ceiling height, the age of your house, the quality of your insulation, and the climate in your area. Always have a geothermal contractor or HVAC professional perform a Manual J calculation on your home to determine what size heat pump is right for you.
Labor
On average, labor accounts for between 50% and 70% of your total, depending on the type of geothermal heat pump you choose. This is more than you’d pay for most other types of heat pumps because the excavation required to install the ground loops is time- and labor-intensive.
There are a few key factors that will determine where your labor prices fall.
Loop field installation: Excavating soil to install the ground loops required for your system is usually the most expensive part of the labor costs. Horizontal loops involve less intensive drilling and shallower trenches, so they’ll cost less in labor, while vertical loops require specialized equipment and take more time to install.
Ductwork modification or installation: If you don’t already have ductwork installed for cooling and heating, you could pay between $1,400 and $6,000 extra for the installation. Added labor costs could be lower, but still substantial if you need modifications to existing ducts, duct sealing, or duct cleaning.
Property size: The size of your property largely determines whether a horizontal loop or vertical loop is suitable for your home. Homeowners with smaller lots should expect to pay more for labor since they’ll only have space for a vertical loop system, which takes longer to excavate. Those with larger, sprawling properties should have plenty of space for a horizontal loop, which can help keep costs lower.
Local labor costs: The cost of labor in your area will partially determine what you pay for labor. Homeowners in areas with a higher cost of living, like major metropolitan areas and more costly states, should expect to pay higher all-in geothermal heat pump prices because the per-hour cost of labor will be higher.
Additional Costs
Apart from labor costs and system size, there are additional factors that can significantly affect the total cost of a geothermal heat pump.
Electrical upgrades: Geothermal heat pumps use electricity to move heat into and out of your home, so if you’re upgrading from a system that burns fossil fuels for heat, you may need to make some electrical upgrades to support the added load. Upgrading to 200-amp electric service costs between $1,300 and $3,000.
Landscaping restoration: You’ll need to consider the cost of restoring your property to its previous condition after excavation. Prices can range widely, with costs potentially reaching into the thousands if you need to move sprinkler lines, lay down sod, or move landscaping features. Horizontal loops cover more area, so restoration costs will usually be higher.
Geographical location and site conditions: The soil quality in your area plays a key part in labor costs, too. Hard, heavy, clayey soil takes more time and effort to excavate, so labor costs will tend to be higher. Light, sandy soil is easier to excavate and can bring labor costs down. Local regulations and accessibility to your property for heavy excavation equipment will also affect your total.
System efficiency (COP/EER): Heat pumps vary in their levels of efficiency, and the efficiency of your system will affect your material costs. High-efficiency units cost more upfront but may save you money over time. Check the Coefficient of Performance (COP) and the Energy Efficiency Ratio (EER) to determine how efficient a particular heat pump is before installing.
New construction vs. retrofit: Installing a geothermal heat pump in a new construction home will almost always be more affordable than a retrofit in an existing home. Not only are ductwork costs lower due to open walls and easy access, but excavation for your ground loops won’t disrupt landscaping features, and you won’t pay twice for sod installation or seeding.
Permits: Most municipalities require permits for any HVAC system installations or modifications. In either case, you should budget for permit fees for geothermal heat pump installation, which average between $50 and $2,000, depending on your location. Some areas require separate permits for open-loop systems that discharge used water.
Running and Maintenance Costs
One of the major benefits of installing one of these systems is the relatively low cost to run a geothermal heat pump. According to the U.S. Department of Energy, a geothermal heat pump can cost several times what other HVAC systems cost upfront, but the ongoing energy savings from lower heating and cooling costs can make up that difference in an average of 5 to 10 years.
There are three major factors to consider when estimating the long-term costs of going geothermal:
Operating costs: The average annual cost to run a geothermal heat pump is between $800 and $1,050, which comes out to between $67 and $88 per month. That’s based on the average consumption of 4,000 to 6,000 kilowatt-hours (kWh) per year and the average cost per kWh of 17.47 cents.
Maintenance and repairs: Geothermal systems require less maintenance and have fewer components that can fail. Annual inspections cost between $75 and $250, and occasional repairs average between $400, lower than for fossil fuel-based heating systems.
Geothermal heat pump lifespan: Indoor components can last up to 24 years, longer than a typical boiler, while the underground loop can exceed 50 years, so the cost to replace a geothermal heat pump the first time will be lower, and you’ll save even more since you can reuse the buried components.
According to ENERGY STAR, a geothermal heat pump can save an average of $830 per year on heating and cooling costs compared to more traditional systems. Since a geothermal heat pump can last for up to 24 years, that’s a total savings of close to $20,000.
Comparison to Other HVAC Systems
Geothermal heat pumps are more expensive upfront than most other types of heat pumps, or standalone furnaces or central AC systems. However, their efficiency and longevity usually lead to long-term savings on maintenance and energy bills.
The table below compares geothermal costs to other heat pumps and conventional HVAC systems, pairing heating and central AC costs for a fair comparison.
Installation Cost | Utility Bills | Maintenance Requirements | Lifespan | Running Costs | |
Air-source heat pump | $5,000 – $15,000 | Low | Low | 10 – 25 years | Low |
Geothermal heat pump | $12,000 – $32,000 | Very low | Very low | 20 – 25 years for unit/50+ years for underground loop | Very low |
Furnace and central AC | $7,800 – $19,500 | High | High | 15 – 25 years | High |
Boiler and central AC | $8,000 – $20,500 | High | High | 15 – 25 years | High |
Ductless mini-splits | $2,000 – $9,000 | Low | Low | 15 – 20 years | Low |
DIY vs. Hiring a Pro
Installing a geothermal heat pump is not a job for DIYers. The installation requires deep excavation, which can be hazardous if utility lines or septic systems are present, and involves electricity and refrigerants, which carry their own risks and regulations. Every step of the installation is dangerous and requires a professional.
Even if you were comfortable doing the work yourself, sizing your heat pump properly is crucial for efficiency and system lifespan, and making errors is easy to do without experience. Additionally, most municipalities only allow licensed professionals to pull permits for HVAC replacements, and refrigerant is strictly regulated, so only pros can order and work with the material.
Hiring a pro to handle your geothermal heat pump replacement costs a lot, but it’s worth hiring an expert because it ensures a safe, legal installation, protects warranties, and keeps your system running efficiently..
Ways to Save on Geothermal Heat Pump Costs
Geothermal heat pumps are expensive due to the large amount of labor required for excavation and installation. Luckily, there are a few things you can do to bring down your upfront costs and save more over time.
Consider financing: Because geothermal installation costs are high, financing can help manage upfront expenses. Consider home equity lines of credit (HELOC), home equity loans, renovation or 203k loans, or personal loans to see what works best for your needs.
Look for rebates and tax credits: Check the Database of State Incentives for Renewables and Efficiency (DSIRE), as you may be eligible for perks from your state, city, or electric company.
Get an energy audit done: An energy audit costs an average of $440, but it can point out areas where you’re wasting energy, helping you reduce electricity costs and strain on your new heat pump.
Choose the right system for your home: Talk with a local HVAC pro to choose the best system for your budget and situation. A closed-loop system with a vertical loop is the most common, but if your property allows, you could save money by choosing a horizontal loop, an open-loop system, or a pond loop system.
Get multiple estimates: Since labor makes up most of the cost, prices can vary widely. Get at least three quotes from local pros and compare to find the best value.
FAQs
A 2,000-square-foot house needs a 3-ton geothermal heat pump, in most cases, which costs between $7,500 and $28,000. Your total will depend on many factors, though, including the climate in your area, the ceiling height in your home, the age of your structure, and the quality of your insulation. Have a professional perform a Manual J calculation on your home to determine the appropriate system size and the associated cost.
Geothermal heat pumps are very often worth the money if you can afford the high upfront cost. While they’re more expensive than most other HVAC systems, they’re extremely efficient and have a longer lifespan than other equipment. While you’ll pay thousands of dollars more to go geothermal, the system will save an average of $830 per year on heating and cooling bills.
The payback period for a geothermal system typically ranges from 3 to 15 years, depending on factors like installation cost, local energy prices, system efficiency, and available incentives. Although upfront costs are higher, a geothermal heat pump's high efficiency, which often cuts energy use by 40-70%, and long lifespan make it a strong long-term investment.