Few home expenses arrive with less warning than a dead furnace in January. In Ontario in 2026, a high-efficiency gas furnace replacement typically costs $5,500–$9,500 installed, with premium modulating units and complex installs reaching $12,000.
But 2026 is also the era of the heat-pump question: with federal and provincial incentives, a cold-climate heat pump can compete with gas on lifetime cost. Figures below are NorthPeak planning estimates including removal, permits and standard venting.
Furnace costs by type
| System | Installed range | Efficiency |
|---|---|---|
| Single-stage gas furnace (92–96% AFUE) | $5,500–$7,500 | Good; basic comfort |
| Two-stage / modulating gas furnace | $7,500–$9,500 | Better comfort, quieter, 96–98% AFUE |
| Furnace + central AC combo | $10,000–$15,000 | Best value if both are aging |
| Cold-climate heat pump | $15,000–$25,000 | Heats and cools; rebates apply |
Sizing: the mistake that costs you twice
Furnaces are sized in BTUs — a typical 2,000 sq ft Ontario home needs roughly 60,000–80,000 BTU. An oversized furnace short-cycles, wearing out parts and leaving cold spots; an undersized one runs constantly in January. Insist on a proper heat-loss calculation (Manual J), not a rule of thumb based on your old unit. If your home's insulation or windows improved since the old furnace went in, you may need a smaller unit than you think.
Rebates and the heat-pump alternative
- Oil to Heat Pump Affordability Program: federal funding for oil-heated homes switching to heat pumps — worth checking if you still burn oil.
- Enbridge Home Efficiency Rebate Plus: Ontario homeowners can access rebates for insulation, windows and heat pumps through utility programs.
- Canada Greener Homes Loan: interest-free loans up to $40,000 over 10 years for eligible retrofits.
- The heat-pump math: at Ontario electricity vs. gas prices, a cold-climate heat pump's operating cost is competitive — and it replaces your AC too. Get quotes for both before defaulting to gas.
Emergency replacement premium: a furnace that dies in January costs 10–20% more to replace than one swapped in October. If yours is 15+ years old, get quotes in the fall — on your schedule, not the weather's.
Frequently asked questions
How much does a new furnace cost in Ontario in 2026?
A high-efficiency gas furnace typically costs $5,500–$9,500 installed. Premium modulating units reach $12,000; a furnace-plus-AC combo runs $10,000–$15,000.
How long do furnaces last in Ontario?
15–20 years for a gas furnace with regular maintenance. If yours is over 15 years old and needs a major repair, replacement usually beats repair.
Should I replace my furnace with a heat pump?
Cold-climate heat pumps now handle Ontario winters and provide cooling too. With rebates and the Greener Homes interest-free loan, lifetime costs can beat gas — get quotes for both.
What rebates are available for furnaces in Ontario?
Programs change often; check the Oil to Heat Pump Affordability Program, Enbridge Home Efficiency Rebate Plus, and the Canada Greener Homes Loan (up to $40,000 interest-free) before you buy.
Sources and methodology
- Natural Resources Canada: Heating equipment
- Canada Mortgage and Housing Corporation (CMHC)
- Vista Builders: Home Renovation Cost in Ontario (2026 Guide)
This article provides general information for planning purposes, not professional advice or a quote. Cost figures are NorthPeak planning estimates unless a source is named; confirm current prices with licensed local contractors and professionals before making decisions.