The most notable difference between a furnace and a heat pump is that a furnace heats your home through combustion (using fuel) and a heat pump extracts heat from the outside air (regardless of the external temperature) to move warm air through your house. A furnace utilizes fuel and a fan to heat your home, while heat pumps pull warmth from the outside air and use it to warm your home. Heat pumps are a great option for a areas like Phoenix that don’t see long or extremely cold winters.