How Much Does It Cost to Replace a Furnace in Canada?

Replacing a furnace in Ontario runs $3,500 to $8,500 installed for most homeowners. Most people land between $4,500 and $6,500 all-in, covering equipment, labour, permits, and removal of the old unit. Modulating high-efficiency models push toward $10,000.

One thing worth knowing before you start collecting quotes: every new gas furnace sold in Canada is already high-efficiency. Federal regulations set the minimum at 95% AFUE, so the old 80% and 90% units you'll see referenced in older cost guides aren't available for new installations anymore. Your real decision is which tier of high-efficiency furnace to buy.

P.S. — If you're staring down a $6,000 furnace bill and wondering how to cover it, Lotly helps Ontario homeowners access funds through a secured home loan. All credit scores and income types welcome. See your options here.

How much does a gas furnace cost in Ontario?

Two-stage 95–96% units are the most common choice for Ontario homes. They cost moderately more than single-stage and deliver noticeably better comfort by running longer at lower output instead of blasting on and off.

The jump from 96% to 98% is even smaller than it looks. In a typical 1,500-square-foot home, that difference saves roughly $50 to $100 a year, against a price premium of around $1,500. Payback runs 15 to 30 years, which is longer than the furnace will last.

A few line items that belong in your budget:

• Labour adds $1,500 to $3,000 depending on installation complexity
• Ontario municipalities require a permit, typically $100 to $300
• Old furnace removal and disposal runs $100 to $500
• High-efficiency furnaces use PVC sidewall venting rather than a metal chimney, and that conversion costs $200 to $500 if your home doesn't have it

GTA and Ottawa pricing runs higher than smaller Ontario cities on both labour and equipment. If two quotes are $2,000 apart, the gap is usually the efficiency tier, the brand, or what the installation scope actually includes.

What affects the final price?

Fuel type. Natural gas is the default for most Ontario homes. Electric furnaces cost less upfront ($1,000 to $3,500 for the unit) but far more to run. Oil runs $2,500 to $6,000. Switching fuel types, say from oil to gas, adds $1,000 to $3,000 or more for new venting and gas line work.

Home size. Furnace sizing is measured in BTUs per hour, roughly 30 to 60 BTUs per square foot depending on insulation and climate zone. Ask your contractor for a Manual J load calculation rather than matching your old unit's size. The old one may have been wrong from the start, and oversized furnaces short-cycle and waste fuel.

Ductwork. Damaged, undersized, or incompatible ductwork adds $500 to $3,000. This is the cost most often surfaces once the installer is on-site and looking at your basement.

Brand and warranty. Carrier, Lennox, and Trane cost more and typically come with 10- to 12-year parts warranties. A furnace that fails in year eight is a very different financial situation with a 10-year warranty than with a five-year one.

Licensing. Ontario requires a TSSA-certified technician for gas furnace work. Unpermitted installations can cause problems when you sell or file an insurance claim.

What rebates exist for furnace replacement in Ontario?

For a straight gas-furnace-to-gas-furnace replacement, none. This is the single most outdated claim in most furnace cost guides, so it's worth being specific about what changed.

The Canada Greener Homes Grant closed to new applicants in February 2024. Ontario's Home Efficiency Rebate Plus (HER+) closed in early 2025 and was replaced by the Home Renovation Savings Program, which does not include a rebate for installing or replacing a gas furnace.

The money in 2026 is in heat pumps:

A hybrid setup qualifies, which matters if you like your gas furnace. Running a heat pump as the primary system, with the gas furnace as a cold-snap backup, gets you the heat pump rebate while keeping the furnace for the coldest weeks.

The Home Renovation Savings Program is funded through November 30, 2026, on a first-come basis. Pre-approval is required before installation begins, and applications take 8 to 16 weeks to process.

Toronto homeowners have a separate option: the Home Energy Loan Program offers up to $125,000 in zero-interest financing for qualifying upgrades, including high-efficiency furnaces, repaid through your property tax bill with no credit check.

If you're planning several upgrades, review grants for Canadian homeowners before you commit to any single piece of equipment.

When should you replace instead of repair?

The clearest signal is cost. If a single repair costs more than half of a new furnace, replacement usually wins. Heat exchanger replacement, one of the most common major repairs, runs $1,500 to $3,500, which puts you halfway to a warrantied new unit with 15 to 20 years ahead of it.

Age is the second signal. Gas furnaces last 15 to 20 years; electric ones last 20 to 30. Past 15 years, efficiency declines and repairs get more frequent. Past 20, the arithmetic rarely favours another repair.

Two other things to weigh. If you've called a technician twice or more in the past 12 months, or your total repairs over three years have cost $1,500 to $2,000, you're already in replacement territory on cost alone. And if your heating bills have climbed 20% or more without a rate increase, an aging furnace losing efficiency is a likely culprit.

On the efficiency side: replacing a 70% AFUE furnace with a 96% model cuts gas consumption by roughly 27%. In the GTA, that typically means $400 to $800 a year on bills currently running $1,800 to $3,200.

Should you replace the furnace and AC together?

Bundling saves $500 to $1,500 in labour because the installer is already on-site working with the same ductwork and electrical connections. A combined replacement runs $7,000 to $18,000 depending on equipment tier.

Matched systems from the same brand and series also run more efficiently together and often qualify for extended manufacturer warranties that mismatched systems don't.

Timing matters here. Booking in spring or early fall, when HVAC demand is lower, gets you more negotiating room and faster scheduling than mid-winter or peak summer.

What does an emergency replacement actually cost you?

A furnace that dies in January costs more than the same furnace replaced in April. Emergency calls during peak heating season carry a 20 to 40% labour surcharge because demand outstrips available installers. You have no time to compare quotes, so you take the first offer. Space heaters or a hotel while you wait add another $200 to $1,000.

If your furnace is 15 or more years old, getting quotes now converts a potential crisis into a scheduled project. You get time to compare contractors, choose the right tier, and arrange financing without a cold house forcing your hand.

How should you pay for it?

Many HVAC companies offer payment plans at 12% to 19.99%, and some require strong credit to qualify. Lease-to-own contracts deserve particular scrutiny: terms frequently run 192 months and can cost 40 to 60% more than buying outright. Ontario has banned new security interests on home titles for furnaces and water heaters, which removes one historical risk, but the total cost math still needs checking.

Credit cards are convenient and expensive. A $6,000 balance at 20% adds over $1,200 a year in interest.

Here's what the difference looks like on a $6,500 replacement:

The dealer's monthly payment feels manageable, but across 60 months you're paying 30 to 40% more than the furnace cost. For a fuller comparison of borrowing options, see Lotly's guide to home renovation loans.

Before you call a contractor

Check your furnace's age, brand, model, and AFUE rating on the unit's label, and add up what you've spent on repairs over the past three years.

If you're considering a heat pump rather than another furnace, book the pre-retrofit assessment and get rebate pre-approval before any work starts. Skipping this step disqualifies you regardless of what you install.

Get at least three written quotes, each broken out by unit cost with brand and AFUE specified, labour, permit fees, removal and disposal, and warranty terms. A quote that looks $800 cheaper might exclude permit handling or use a lower tier of equipment. Ask each contractor to run a Manual J load calculation rather than matching your existing unit.

Then run the financing math before you sign anything, and book installation in spring or fall if your current furnace can hold out. After the work is done, confirm you have permit sign-off, warranty documentation, and a walkthrough of the controls.

How can Lotly help cover a furnace replacement?

For Ontario homeowners with equity, a secured home loan usually costs less than dealer financing or credit cards, and approval doesn't hinge on a credit score. Lotly covers $10,000 to $1,000,000, accepts all credit scores and income types including self-employed and gig income, and funds in about two weeks.

Three things to take away:

• Don't count on a furnace rebate. Ontario's current program pays nothing for a gas-furnace-to-gas-furnace replacement. If a contractor quotes you a rebate figure, ask which program and check it against the official site before you factor it into your budget. Heat pump rebates are real and substantial, so price that option if you're open to it.
• Plan the replacement before the furnace forces the issue. At 15 or more years, get quotes and line up financing during shoulder season. That avoids the 20 to 40% winter emergency premium and gives you room to compare contractors properly.
• Check the total cost of borrowing, not the monthly payment. Dealer financing at 14.99% over 60 months adds roughly $2,500 to a $6,500 furnace. If you're also carrying high-interest balances, rolling them into a single secured loan alongside the furnace can lower the blended rate and free up monthly cash flow. Lotly's guide to debt consolidation loans covers how that works.

Book a free consultation to see what a secured home loan looks like for your replacement.

Frequently asked questions

How much does it cost to replace a furnace in Ontario?

$3,500 to $8,500 installed, with most homeowners landing between $4,500 and $6,500 all-in. Modulating high-efficiency models reach $10,000, particularly in the GTA or Ottawa.

What's the minimum furnace efficiency allowed in Canada?

Federal Energy Efficiency Regulations set 95% AFUE as the minimum for new residential gas furnaces. Your existing lower-efficiency unit can keep running legally, but any replacement must meet the 95% standard.

How long does a furnace last?

Gas furnaces run 15 to 20 years with maintenance. Electric furnaces last 20 to 30. After 15 years, efficiency drops and repairs become more frequent, which is when you should start planning a replacement.

Is it cheaper to repair or replace?

If one repair exceeds half the cost of a new furnace, or you've needed multiple repairs in the past year, replacement is usually the better financial call. Heat exchanger replacement at $1,500 to $3,500 is a common tipping point.

Are there rebates for furnace replacement in Ontario?

Not for gas furnaces. The Home Renovation Savings Program funds heat pumps ($500 to $1,250 per ton depending on your current heating source), insulation, and other upgrades, but not gas furnace replacements. The Canada Greener Homes Grant and Ontario's HER+ program have both closed.

Can I replace my furnace and AC at the same time?

Yes, and bundling can save $500 to $1,500 in labour while ensuring the systems are properly matched. Expect $7,000 to $18,000 combined depending on tier.

How can I pay for a replacement without the cash on hand?

Options include HVAC dealer financing, credit cards, personal loans, or borrowing against home equity. A secured home loan typically offers lower rates than unsecured options and doesn't require perfect credit. See your options with Lotly.

‍