This report from the U.S. Department of Energy studies the process of determining the proper sized heating and cooling equipment for a house. As houses have been built tighter with better insulation and windows, the same rules-of-thumb have been used to select heating and cooling equipment. Many times the choices are over-sized, thereby wasting initial costs and operating costs. The resulting system may be uncomfortable for the occupants because it may not dehumidify properly. Example installations in Orlando and Chicago houses are presented.