A novel approach has been developed for determining part-load performance of residential appliances. The approach is referred to as the Virtual Test Home (VTH) method and it consists of multiple test rigs and associated algorithms that simulate real world conditions in a controlled, repeatable laboratory environment. The VTH can be used to characterize the part-load performance of gas and electric space and water heating equipment. Unlike the Annual Fuel Utilization Efficiency (AFUE) and Heating Seasonal Performance Factor (HSPF), which are method of tests (MOTs) based on one set of specific conditions, the VTH provides performance characterizations across a wide range of system capacity part-loads ranging from 1-100% and various ambient conditions and building envelope/type. The performance characterizations are then incorporated in building energy modeling software, such as EnergyPlus, to estimate annual appliance efficiencies, and quantify potential annual energy, emissions, and cost savings for various equipment in various buildings and climates. Field data are then used to ground truth the VTH results and ensure accuracy of the resulting modelling work. This paper describes how the VTH test methods and modeling, combined with measurement and verification data collected in the field have resulted in a detailed and flexible approach to assessing as-installed performance of HVAC and water heating equipment and quantifying potential energy and cost savings in buildings.