A condensing gas furnace is a high-efficiency furnace that has a secondary heat exchanger that condenses hot exhaust gases to extract the "waste" heat before it wafts up the chimney. The heat-extraction process with the secondary heat exchanger is so remarkably efficient that the hot exhaust gases are cooled to the point where they can safely exit your home inside a plastic pipe installed through a side wall. The combustion exhaust gases are passed through a secondary heat exchanger that absorbs much of the remaining heat from the gases. As the gases cool, they condense to form water and carbon dioxide, which together form carbonic acid. The water (called condensate) drips out through a drain pipe, and the remaining flue gases are vented to the outdoors through a plastic pipe.

Condensing furnaces are more efficient than traditional furnaces because they can extract extra heat from the water vapor that would normally be vented out of your home. They have a second heat exchanger that can extract heat from the exhaust gases before they’re vented away, reclaiming heat that would otherwise be wasted through ventilation. The AFUE ratings of condensing furnaces can be as high as 98 percent, while traditional furnaces have an AFUE rating of 65 to 70 percent.

In summary, a condensing gas furnace is a high-efficiency furnace that has a secondary heat exchanger that condenses hot exhaust gases to extract the "waste" heat before it wafts up the chimney. They are more efficient than traditional furnaces because they can extract extra heat from the water vapor that would normally be vented out of your home.