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Residential sized heat pumps provide a way in which geothermal energy in the temperature range below 50°C can be used for large scale distributed applications. In such systems however, it is apparent that the heat pump units must be designed with particular attention paid to the specific temperature level of the fluid and the cost of the fluid. This paper considers the optimization of residential-sized units for such applications. The optimization reveals that the heat pump units that are to be used with fluids that have costs lying in the range of 0.05 to 0.40 $/cubic metre must be designed for specific flow rates of water that are 2.5 to 5 times less than the nominal flow rates of the bulk of present off-the-shelf water source units, when using electricity that has a cost range of 0.03 to 0.10 $/kWh.