A solid fuel furnace having an oscillating grate plate solid fuel burner therein wherein the grate plates are in a stepped arrangement and every other plate moves together, in an opposite direction from the adjacent plates so that the solid fuel is kept moving down the step grate positively. Additionally, the solid fuel burner is mounted in a furnace housing which is designed to utilize the hot combustion gases to preheat incoming or makeup air for a blower used for supply air flow for heating. Baffles are used to provide a substantially elongated path for the combustion gases to ensure adequate heat exchange in a compact space.