An improved high-efficiency furnace for use with manufactured housing has a modular heat exchanger assembly having a drum and a plurality of serpentine shaped tubes. A burner extends at least partially into the drum portion of the heat exchanger which acts as a combustion chamber. Hot combustion gases flow upwardly within the drum and enter the tubes heating the drum and tubes. Room air is drawn into the furnace by a circulating blower and blown against the plurality of tubes. The room air is then directed to flow around the drum portion of the heat exchanger where it is further heated before being discharged into the space being heated. The burner includes an inwardly tilted target plate having a plurality of fingers for facilitating the formation of a stable ball of flame within the drum. A lower airbox which provides combustion air to the burner includes a smooth turn and a neck-down portion for reducing undesirable flow patterns and an axial combustion fan provides positive static pressure in the inlet airstream. With oil-fired burners, the furnace includes an improved ceramic combustion chamber having multiple openings and a groove channel.