Short answerTypical market pricing in Washtenaw and western Wayne County puts a ducted cold-climate heat pump system at roughly $9,000 to $18,000 installed before incentives in 2026. A standard heat pump paired with an existing gas furnace as a dual-fuel system often lands lower. The federal 25C credit, DTE rebates and Michigan's income-based home energy rebates can take a meaningful share off, depending on the year and your eligibility.
Three different jobs that all get called "a heat pump"
When a homeowner in Ann Arbor or Canton asks what a heat pump costs, the first thing we ask back is which kind of system they mean, because the price ranges are far apart. Typical market pricing in Washtenaw and western Wayne County in 2026 looks like this:
- Standard heat pump replacing a central AC, paired with the existing gas furnace (dual-fuel): roughly the cost of a good two-stage AC plus a modest premium, so often in the upper half of the new AC range. The furnace handles the coldest weather; the heat pump handles cooling and mild-weather heating.
- Cold-climate heat pump with an electric air handler, replacing both furnace and AC: roughly $9,000 to $18,000 installed before incentives. This is a full-system replacement with variable-speed equipment rated to keep heating well below zero.
- Cold-climate heat pump as dual-fuel with a new high-efficiency furnace: the broadest scope and generally the top of the range or above it, but with the best cold-snap resilience.
These are market figures, not our price list. We quote heat pumps only after a free in-home visit, because the electrical panel and the ductwork decide a lot of the number.
Cold-climate versus standard: what the premium buys
A standard heat pump loses capacity fast as outdoor temperature drops and relies on backup heat below about 25 to 30°F. In Southeast Michigan, where January averages in the 20s and a polar vortex week can hold minus 10 overnight, that is a lot of backup. A cold-climate heat pump uses a variable-speed inverter compressor and enhanced vapor injection to keep most of its rated heating output at 5°F and to keep running usefully to minus 15 or lower. It costs more because the compressor, controls and outdoor coil are more sophisticated.
Cold-climate heat pumps in Southeast Michigan covers how they perform through our winters. The short version: they work here, they are quieter and more comfortable than anything else, and the choice between all-electric and dual-fuel is mostly about the backup strategy and the gas versus electric rates.
The backup heat question
Every heat pump system in Michigan needs a plan for the coldest days.
Dual-fuel. The heat pump runs down to a switchover temperature, often set between 20 and 35°F based on DTE's gas and electric prices, and the gas furnace takes over below it. Keeps the existing furnace, so the job cost is lower if the furnace is reasonably new. Heat pump vs furnace in Michigan walks through the switchover math.
All-electric with electric resistance backup. An air handler with 10 to 20 kW of electric heat strips inside. Simple, but the strips are expensive to run, and a 20 kW strip bank needs a 100-amp circuit on its own. Many 100-amp and some 150-amp panels in 1950s-70s houses across Westland, Wayne and Ypsilanti Township cannot support that without a service upgrade, which is a separate electrician's quote and can add a few thousand.
All-electric, cold-climate, minimal backup. A properly sized cold-climate unit with a small strip bank for the rare extreme. Lowest operating cost in a tight, well-insulated house; riskier in a leaky prewar two-story.
Whichever route, the outdoor unit placement matters more than it does for an AC. A heat pump defrosts in winter by briefly running in reverse, which melts frost off the outdoor coil and drips it onto the pad. That water refreezes. A unit set at grade next to a walkway builds an ice sheet, and one under a roof eave gets buried by every slide of snow. We set them on a riser, away from drip lines, and where the defrost water can drain.
What the installed price includes
- Outdoor unit on a new pad, with a stand or riser so it sits above the snow line, which matters because a heat pump runs all winter and a unit buried in a drift at ground level cannot defrost properly.
- Indoor coil on the existing furnace (dual-fuel) or a new air handler with heat strips (all-electric).
- Line set, usually new, since heat pump line sets are sized differently from the old AC's.
- Condensate handling for both cooling and the defrost cycle.
- Electrical: a new breaker and disconnect for the outdoor unit, and for an air handler, a dedicated 240-volt circuit sized to the strips.
- Thermostat or control: a heat pump thermostat with outdoor sensor for dual-fuel switchover, or the manufacturer's communicating control for a variable-speed system.
- Ductwork evaluation. Heat pumps move more air at lower supply temperatures than a furnace, so undersized returns that a furnace tolerated become a real problem. Duct corrections are sometimes the difference between a system that works and one that disappoints.
- Permit, inspection, evacuation, weighed charge, disposal and refrigerant recovery.
Where the money goes in local housing
A 2005 Saline colonial with a 200-amp panel, a 5-year-old 96% furnace and PVC venting is the easy case: a cold-climate heat pump in dual-fuel configuration, no panel work, existing ducts fine. Middle of the range. A 1962 Garden City ranch with a 100-amp panel, a 20-year-old furnace and one return grille is the hard case: all-electric would need a service upgrade and duct work, so dual-fuel with a new furnace is the usual recommendation, and the total reflects two pieces of equipment. A prewar Ypsilanti two-story with leaky ducts in a Michigan basement is a case where we often advise insulation and air sealing before a heat pump, because the heat pump's advantage shrinks in a drafty house.
Incentives
This is where heat pumps differ from any other HVAC purchase.
- Federal 25C credit: 30 percent of the cost up to a capped amount for a qualifying heat pump, a higher cap than for furnaces or AC. Congress has adjusted this program before and may again, so verify the current-year rules before counting on it.
- DTE Energy rebates for qualifying heat pumps, with amounts that change annually; check dte.com or our DTE rebate guide.
- Michigan Home Energy Rebates (HOMES and HEAR) through EGLE, income-based, with potentially large rebates for heat pumps and electrical upgrades for qualifying households.
- Consumers Energy rebates for the Chelsea, Dexter and Manchester area.
Stacking rules vary. Michigan HVAC rebates and tax credits lays out how they fit together. Do not let anyone promise a specific amount before the application is approved.
How we approach a heat pump quote
Free estimate, with a load calculation, a panel inspection and a duct static measurement before any number is written. The price is flat-rate and includes the permit. We quote dual-fuel and all-electric side by side when both are realistic, and we are honest when a heat pump is not the right move for a particular house, such as a drafty 1920s bungalow where the money is better spent on a high-efficiency furnace and attic insulation first. When it is the right move, our heat pump installation page covers what the day looks like.