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No, boilers and water heaters are not interchangeable because they serve different primary functions. Boilers are used for central heating systems, providing hot water or steam to heat your home. In contrast, a water heater's purpose is to supply hot water for daily household use, such as for faucets and showers. A water heater alone cannot supply the warm water or steam needed for a central heating system.

While they are not interchangeable, it is common to have both a boiler and a water heater. In fact, a conventional boiler often works best when a water heater system is already in place. The two systems can be combined to provide both heating and hot water, either by pairing a boiler with an indirect water heater or by installing a premade combination boiler-water heater unit. For home heating, some homeowners may also opt for a furnace instead of a boiler.

You can use a boiler and a furnace, although it’s not common to use both for whole-house heating. For example, your furnace may take care of HVAC heating through your vents, while a boiler powers your floor-based radiant heating in the bathrooms. Mixing and matching like this gives homeowners a variety of heating possibilities.

The cost to install a steam boiler varies depending on the type, fuel used, and your house size. The average cost to install a boiler is $5,900. You could spend $2,000 for a basic electrical steam boiler or up to $9,000 for a high-efficiency oil-burning steam boiler. Boiler installation is a job that’s best left for professionals to complete, and, in some states, only licensed installers can legally complete the job.

The main difference between an outdoor wood furnace versus an outdoor wood boiler is what each appliance is heating. An outdoor wood furnace burns wood to create heat, which warms the air and moves it through the ducts in your home. An outdoor wood boiler uses the heat from burning wood to warm water, which goes through pipes to radiators in the home.