A household furnace is a major appliance that is permanently installed to provide heat to an interior space through intermediary fluid movement, which may be air, steam or hot water. The most common fuel source for modern furnaces in the United States is natural gas: other common fuel sources include LPB (liquefied petroleum gas), fuel oil, coal or wood. In some cases electrical resistance heating is used as the source of heat, especially where the cost of electricity is low.
Combustion furnaces always need to be vented to the outside. Traditionally, this was through a chimney, which tends to expel heat along with the exhaust. Modern high-efficiency furnaces can be 98% efficient and operate without a chimney. The small amount of waste gas and heat are mechanically ventilated through a small tube through the side or roof of the house.
"High-efficiency" in this sense may be misleading, because furnace efficiency is typically expressed as a "first-law" efficiency, whereas the energy efficiency of a typical furnace is much lower than the first-law thermal efficiency. By comparison, co-generation has a higher energy efficiency than is realizable from burning fuel to generate heat directly at a moderate temperature. However, as the vast majority of consumers (as well as many government regulators) are unfamiliar with energy efficiency, Carnot efficiency, and the second law of thermodynamics, the use of first-law efficiencies to rate furnaces is well-entrenched.
Modern household furnaces are classified as condensing or non-condensing based on their efficiency in extracting heat from the exhaust gases. Furnaces with efficiencies greater than approximately 89% extract so much heat from the exhaust that water vapor in the exhaust condenses; they are referred to as condensing furnaces. Such furnaces must be designed to avoid the corrosion that this highly acidic condensate might cause and may need to include a condensate pump to remove the accumulated water. Condensing furnaces can typically deliver heating savings of 20%-35% assuming the old furnace was in the 60% Annual Fuel Utilization Efficiency (AFUE) range.