The balance point is the outdoor temperature at which a heat pump's heating output exactly equals the home's heat loss. Above it, the heat pump alone keeps the house warm; below it, the home loses heat faster than the heat pump can supply it, and something has to make up the difference — electric-resistance backup heat or, in a dual-fuel system, a gas furnace.
The balance point is not a fixed number; it is where two lines cross. One line is the home's heat loss, which rises as it gets colder (this is what a Manual J load calculation quantifies). The other is the heat pump's capacity, which falls as it gets colder. A correctly sized standard heat pump in a well-built home reaches its balance point well below 40°F, per DOE guidance; a cold-climate model engineered to hold capacity at 5°F pushes the balance point much lower, so backup heat rarely runs.
Balance point is the concept that ties a heat-pump install together. It is the reason sizing matters (an oversized unit short-cycles in mild weather; an undersized one leans on expensive backup heat all winter), the reason the cold-weather capacity rating matters as much as the HSPF2 average, and the number a dual-fuel system uses to decide when to switch from the heat pump to the furnace. Ask an installer where your system's balance point lands and how often backup heat is expected to run for your climate.