A properly insulated foundation can result in lower heating costs and more comfortable below-grade rooms. Heat loss from an uninsulated, space conditioned basement may represent up to 50 percent of a home's total heat loss in a home which otherwise is tightly sealed, well-insulated. Foundation insulation is used primarily to reduce heating costs and has little or no benefit in lowering cooling costs.

In addition to reducing heating costs, foundation insulation increases comfort, reduces the potential for condensation and corresponding growth of mold, and increases the livability of below-grade rooms. It can also help prevent insect infestation and radon infiltration.

You can achieve considerable savings in space conditioning costs by insulating the foundation, but the installation costs can vary, especially for retrofit projects. The type of materials used, the application method, and the extent of work all affect the overall cost. Simple payback is typically in the range of 6 months for a simple do-it-yourself installation to 10 years for professionally installed and more involved work. Adding foundation insulation during new construction is usually less expensive.