No — most heat pumps are air-source, not geothermal

Heat pumps come in two main types: air-source and geothermal (also called ground-source). Air-source heat pumps pull warmth from the outside air and move it indoors in winter, or reverse the process in summer. Geothermal heat pumps pull warmth from the ground or groundwater instead. Most residential heat pumps installed in the United States are air-source because they cost less to install and work in nearly any property. Geothermal systems are more efficient but require significant excavation and are practical only on certain properties.

When someone says "heat pump" without specifying the type, they almost always mean air-source. Understanding which type you have — or which type makes sense for your home — depends on your climate, your property layout, and your budget.

Key Takeaways

  • Air-source heat pumps are the most common residential type and work by moving heat from outside air into your home; geothermal heat pumps do the same thing but pull heat from the ground instead.
  • Geothermal systems are more efficient and quieter but require digging trenches or drilling wells on your property, which costs significantly more upfront.
  • Air-source heat pumps work in cold climates but lose efficiency as outdoor temperatures drop below freezing; geothermal systems maintain consistent performance year-round.
  • Your property size, soil type, and whether you have space for ground loops determine whether geothermal is even possible for your home.

How air-source heat pumps work

An air-source heat pump contains a refrigerant that circulates between an outdoor unit and an indoor unit. In winter, the outdoor unit absorbs heat from the air outside — even cold air contains some heat energy — and the refrigerant carries it indoors, where it releases that heat into your home. In summer, the cycle reverses: the indoor unit absorbs heat from inside your home, and the outdoor unit releases it outside.

The outdoor unit looks similar to an air conditioner condenser and makes noise as it runs. Because the unit sits outside and operates year-round, you hear it more than you would with a furnace or traditional air conditioner. Air-source systems work in climates down to about 0°F, though their heating output drops as the temperature falls. Below that point, most air-source systems switch to electric resistance heating (essentially a space heater) to maintain warmth, which uses more energy.

How geothermal heat pumps work

A geothermal heat pump operates on the same principle as an air-source system but exchanges heat with the ground instead of the air. The system includes a loop of pipe buried underground — either in horizontal trenches, vertical wells, or a nearby pond — filled with a heat-transfer fluid. In winter, that fluid absorbs heat from the ground (which stays around 50°F year-round below the frost line) and carries it to the indoor unit. In summer, the process reverses.

Because ground temperature is stable and warmer than winter air, geothermal systems maintain consistent efficiency throughout the year. They also run much more quietly than air-source systems because there is no outdoor fan unit. The trade-off is installation: you need to excavate your property to bury the loops, which typically costs $15,000 to $30,000 more than an air-source system, depending on your soil type and how deep the loops must go.

When air-source makes sense

Air-source heat pumps are the practical choice for most homeowners. They cost less to install, require no digging, and work in nearly any climate where heating is needed. They are especially common in mild climates where winter temperatures rarely drop below 20°F, because the system does not need to rely on backup electric heating very often.

Air-source systems also work well if your property is small, your soil is rocky or clay-heavy, or you rent rather than own. If you live in a neighborhood where digging is restricted or your lot is too small for ground loops, air-source is your only option. Modern air-source heat pumps are also quieter than older models, though they will never be silent.

When geothermal makes sense

Geothermal heat pumps make sense if you own your home, plan to stay for at least 10 years, have space for ground loops, and live in a climate with cold winters. The higher upfront cost is offset by lower operating costs over time — geothermal systems use 30 to 70 percent less energy than air-source systems, depending on your climate and how you compare them. If you heat with oil or propane now, switching to geothermal can cut your heating costs substantially.

Geothermal is also the better choice if noise is a concern. The outdoor unit is silent because there is no fan; only the indoor unit makes sound, and it is quieter than an air-source system. You also need adequate space: horizontal loops typically require a yard at least as large as your home's footprint, or you need the option to drill vertical wells. Your soil type and water table depth affect cost and feasibility — a soil test and site survey are necessary before committing.

Installation and space requirements

Air-source heat pumps need only an outdoor unit (roughly the size of an air conditioner) placed on the ground, a roof, or a wall. The indoor unit connects via refrigerant lines, and installation typically takes one to two days. You need clearance around the outdoor unit so air can flow freely, but most properties have adequate space.

Geothermal installation requires either horizontal trenches (typically 4 to 6 feet deep and 100 to 300 feet long, depending on your heating needs) or vertical wells drilled 150 to 300 feet down. Horizontal loops work on larger properties; vertical wells suit smaller lots but cost more to drill. Installation takes one to two weeks and involves significant disruption to your yard. Some properties cannot accommodate either option — for example, if bedrock is shallow or your water table is too high.

Climate and efficiency differences

Air-source heat pumps lose efficiency as outdoor temperature drops. At 47°F, a typical air-source system operates at full efficiency. At 32°F, efficiency drops by 20 to 30 percent. Below 0°F, the system switches to electric resistance heating, which is expensive. In climates where winter temperatures regularly drop below 0°F, you will see higher heating bills with an air-source system than with geothermal.

Geothermal systems maintain consistent efficiency year-round because ground temperature does not fluctuate like air temperature. In very cold climates, this advantage is substantial. However, in mild climates where winter temperatures rarely drop below 20°F, the efficiency gap narrows, and the lower upfront cost of air-source makes more financial sense.

Cost comparison

An air-source heat pump typically costs $3,000 to $8,000 installed, depending on your home size and system capacity. A geothermal system costs $15,000 to $30,000 or more, with the wide range reflecting differences in drilling depth, soil conditions, and loop design. Some states and utilities offer rebates for both types, which can reduce the upfront cost by 20 to 50 percent.

Operating costs favor geothermal over time. If you heat with electricity, a geothermal system may cost 30 to 70 percent less per year to operate than an air-source system, depending on your climate. If you currently heat with oil or propane, the savings are even larger. However, if you live in a mild climate and your air-source system rarely needs backup heating, the annual operating cost difference may be small enough that the lower upfront cost of air-source wins out.

Frequently Asked Questions

Can I convert an air-source heat pump to geothermal later?

Technically yes, but it is expensive and disruptive. You would need to excavate your property, install new ground loops, and connect them to a new or modified indoor unit. Most homeowners choose one system at installation rather than upgrading later. If you think geothermal might make sense for your home, it is worth exploring before you install air-source.

Do geothermal heat pumps work in very cold climates?

Yes — geothermal is actually the better choice in climates with very cold winters because ground temperature remains stable. Air-source systems lose efficiency as outdoor air temperature drops, but geothermal systems maintain consistent performance. If you live where winter temperatures regularly drop below 0°F, geothermal will cost less to operate over time.

What if my property is too small for geothermal loops?

Vertical wells take up much less surface space than horizontal loops and can work on small lots, but they cost more to drill. If vertical wells are not practical or affordable, air-source is your option. Some properties with ponds or lakes can use pond loops, which require less digging than ground loops.

How long do heat pumps last?

Both air-source and geothermal heat pumps typically last 15 to 25 years with regular maintenance. Geothermal systems often last longer because the ground loops are protected underground and the system does not run as hard. Air-source systems are exposed to weather and temperature swings, which can shorten their lifespan slightly.

Do I need a backup heating system with a heat pump?

Air-source systems in cold climates usually include electric resistance backup heating built into the indoor unit. Geothermal systems rarely need backup because they maintain efficiency year-round. If you want additional backup — for example, a gas furnace — that is a separate decision and adds cost.