Heat Pump vs Gas Furnace in Ontario: Real Costs, Real Numbers
We installed both. We service both. We are not picking a side. This page lays out the actual installed cost, monthly run cost, and 12-year total cost of ownership for a typical Mississauga home in 2026. No marketing, no spin.
12-year total cost of ownership
Based on a typical 2,000 sq ft Mississauga home, Enbridge GTA gas at about $0.32/m3 marginal including HST (no carbon charge since April 2025), OEB time-of-use electricity from November 2025 (9.8, 15.7 and 20.3 cents per kWh), and a 12-year ownership window. We use installed prices before rebates so the comparison is honest, then show the rebated number separately.
| Cost line | Gas furnace (96 AFUE) | Cold-climate heat pump | Hybrid (both) |
|---|---|---|---|
| Installed cost (before rebate) | $4,500 | $8,500 | $11,500 |
| Eligible rebate (HRS) | None in 2026 | Up to $7,500 (non-gas) | Up to $7,500 (non-gas) |
| Net installed cost | $4,500 | $1,000 to $6,500 | $4,000 to $9,500 |
| Annual heating energy cost | $800 to $1,000 | $850 to $1,150 | $800 to $1,000 |
| Annual AC cost (included) | Separate AC $3,500 install | Included in heat pump | Included |
| 12-year energy total | $9,600 to $12,000 + AC unit cost | $10,200 to $13,800 | $9,600 to $12,000 |
| Maintenance over 12 years | $1,200 | $2,400 | $2,400 |
| 12-year all-in total | $15,300 to $17,700 plus AC | $13,600 to $22,700 | $16,000 to $23,900 |
Numbers assume a 2,000 sq ft Mississauga home with average insulation, R-2000 not required. Your actual numbers vary based on insulation, air-leakage, and how cold your winter runs. We provide site-specific numbers during a free in-home assessment.
Efficiency by outdoor temperature
A gas furnace burns fuel at the same efficiency regardless of outdoor temperature. A heat pump's efficiency scales with the temperature difference it works against. At mild temperatures, a heat pump moves three to four units of heat per unit of electricity. As temperatures drop, that ratio falls. Below is what a top-tier cold-climate heat pump actually delivers.
Mississauga sees roughly 15 to 20 days per year below minus 20 Celsius, and roughly 2 to 4 days below minus 25. For most of the heating season a heat pump delivers 2 to 3 units of heat per unit of electricity, which at current Ontario rates puts its running cost roughly level with a 96 AFUE furnace. Efficiency is not the same as cost: a kWh of electricity costs several times more than the same energy in natural gas.
When each option wins
Heat pump wins when
- Your AC is also at end of life and needs replacement anyway
- Your home has 200 amp electrical service or can be upgraded
- You qualify for full federal and provincial rebate stacking
- You plan to stay in the home 5+ years for payback
- You currently heat with oil, propane, or electric resistance
- You want one system that handles heating and cooling
Gas furnace wins when
- Your AC is fairly new (under 7 years) and works fine
- Your home has 100 amp service and panel upgrade is costly
- You plan to move within 2 years (payback window matters)
- You only need to replace heat, not cooling
- Your home has very weak insulation and high heat load
- You qualify for zero rebates (uncommon in Ontario 2026)
What Canadians actually bought in 2026
Plenty of ads suggest every household is switching to a heat pump. The national shipment numbers tell a more measured story. HRAI, the industry association that collects shipment data from Canadian manufacturers and wholesalers, reported these totals for the first half of 2026 compared with the same period in 2025.
| Equipment | Units shipped, first half 2026 | Change vs 2025 |
|---|---|---|
| Residential gas furnaces | 128,307 | down 14 percent |
| Ducted residential heat pumps | 12,564 | down 35 percent |
| Ducted residential air conditioners | 98,249 | down 15 percent |
| Commercial heat pumps | 2,539 | up 67 percent |
Canadian households still bought roughly ten gas furnaces for every ducted heat pump. Every residential category fell, so this is not simply homeowners choosing gas over electric. The whole replacement market slowed. Commercial heat pumps were the one category that grew.
We are deliberately not telling you why those numbers moved, because the report does not say and we have not verified a cause. What the data does support is this: a heat pump is still the minority choice in Canada, and anyone claiming the decision is already settled is selling something. Pick the system that suits your house using the criteria above, not the one that sounds most popular.
Source: HRAI Q2 2026 Canadian HVACR Shipments Report, published July 27, 2026. Figures cover shipments across Canada, not Ontario alone, and HRAI applies an expansion factor for companies outside its reporting panel.
Why hybrid systems often win for Ontario
A hybrid system pairs a cold-climate heat pump with a backup gas furnace. The heat pump handles most heating hours. The gas furnace takes over when outdoor temperatures fall below the switchover point you choose. At 2026 Ontario rates the pure cost crossover is often near 0 to minus 5 Celsius; many homeowners set it lower, around minus 10 to minus 15, to cut gas use further. Gas use often drops 50 to 70 percent, depending on the switchover temperature and the home.
For a typical Mississauga home, the gas furnace covers the coldest stretches of January and February, and the heat pump covers the rest of the season. You get the best of both: the controls can use whichever fuel is cheaper at the current temperature, plus rock-solid performance at minus 30 Celsius. The control board switches automatically based on outdoor temperature.
Hybrid systems qualify for the same federal and provincial rebates as full electric heat pump conversions. Net installed cost typically lands in the same range as a high-efficiency furnace plus a new AC, with similar run cost and lower lifetime carbon. Read our are heat pumps worth it in Canada guide for the case-study math. For how each system actually produces heat and which one suits your house, read heat pump vs gas furnace in Ontario: how they work.
Real Mississauga case: Erin Mills bungalow, 2025 install
A 1,850 sq ft Erin Mills bungalow built in 1978. The homeowners had an 18-year-old AC and a 14-year-old 92 AFUE furnace, both nearing end of life. We installed a Lennox SL25XPV cold-climate heat pump paired with a new 96 AFUE Lennox SL297NV furnace as backup.
- Installed cost: $14,200 (heat pump + furnace + permit + thermostat)
- Rebates received: up to $7,500 (non-gas homes) (Home Renovation Savings Program)
- Net cost to homeowner: $6,200
- Year-1 energy savings vs old system: $1,180 (gas down 62 percent, hydro up 28 percent)
- Estimated 12-year savings: $14,000+ in energy plus avoiding a separate AC purchase
Numbers are real from a 2025 install. Names withheld for privacy. Available on request for verification during your free assessment.
Browse all heating, cooling and rebate guides in our HVAC resource library.
Get the numbers for your home
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Frequently Asked Questions
Got questions about HVAC services in the GTA? We've got answers.
Not against a modern furnace, at current rates. A cold-climate heat pump averages a seasonal COP of about 2.5 to 3 in Ontario, while a 96 AFUE gas furnace runs at 96 percent. The federal carbon charge on natural gas was set to zero on April 1, 2025, so the marginal cost of Enbridge gas in the GTA is about $0.32 per cubic metre including HST, and Ontario TOU electricity is 9.8 cents per kWh off-peak, 15.7 mid-peak and 20.3 on-peak (OEB, November 1, 2025). At those prices a heat pump costs about the same as, or slightly more than, a 96 AFUE furnace per unit of heat. It does save money against oil, propane, electric baseboard or an older 60 to 80 percent furnace, it replaces your AC, and dropping gas service entirely saves the roughly $330 a year customer charge.
No air-source heat pump keeps its full rated capacity that cold. Cold-climate models like the Mitsubishi Hyper-Heat, Lennox Signature SL25XPV, and Bosch IDS Ultra hold most or all of their capacity to about minus 15 Celsius and keep operating, at reduced capacity and efficiency, down to about minus 25 to minus 30 Celsius depending on the model. For homes that see frequent minus 30 nights, a hybrid system pairs the heat pump with a backup gas furnace or electric strip heat that takes over only at the coldest hours.
A cold-climate ducted heat pump runs $5,500 to $11,000 installed in Ontario before rebates. Ductless mini-split heat pumps run $3,500 to $5,500 for a single zone. After the Home Renovation Savings Program rebate of up to $7,500 for a non-gas home (electric, oil, propane), the net cost typically lands between zero and $4,000 for a qualifying installation; natural-gas homes qualify for up to $2,000. We handle all rebate paperwork during installation.
It can, or it can pair with your existing furnace as a hybrid system. A full electric heat pump replaces both your AC and furnace if your home has adequate electrical service (200 amp typically required) and sufficient insulation. A hybrid system keeps your gas furnace as backup, runs the heat pump down to a switchover point set by the installer (commonly around 0 to minus 5 Celsius for lowest cost at current Ontario rates, or about minus 10 to minus 15 to cut gas use further), and switches to gas below it. Hybrid systems work well for older homes with weaker insulation.
The Home Renovation Savings Program (HRS) offers up to $7,500 for a cold-climate air-source heat pump in a non-gas home (electric, oil, propane) or up to $2,000 in a natural-gas home, and up to $12,000 for geothermal. Income-qualified oil homes may get a no-cost heat pump through Save on Energy's Energy Affordability Program. The legacy Enbridge HER+ closed Dec 31 2025.
A quality cold-climate heat pump lasts 15 to 20 years in Ontario with proper maintenance. That is roughly the same lifespan as a high-efficiency gas furnace. The compressor is the most expensive component and the most failure-prone after year 12. Annual maintenance and a clean condenser coil extend life significantly. EcoFrost maintenance plans start at $149 a year.
Yes, and your gas bill drops by a similar amount. For a typical 2,000 sq ft Mississauga home, switching from a 96 AFUE gas furnace to a cold-climate heat pump adds roughly 6,000 to 7,500 kWh of electricity a year, while gas use drops by roughly 1,800 cubic metres (about $575 at 32 cents per cubic metre). At current Ontario rates the two changes roughly cancel out, and the heat pump can come out slightly behind. The real savings come from replacing an aging AC at the same time, from dropping gas service entirely (about $330 a year in customer charges), or from switching away from oil, propane or electric baseboard.
Not efficiently. A heat pump is essentially an AC that runs in reverse, so installing both is duplicate equipment. The right approach when your AC is at end of life is to replace it with a heat pump, which gives you AC in summer and primary heating in winter from the same unit. If your gas furnace is still good, the heat pump pairs with it as a hybrid system.
Modern cold-climate heat pumps run at 55 to 65 decibels at the outdoor unit, similar to a quiet conversation. Variable-speed inverter models run quieter than single-stage AC units. Indoor air handlers run between 40 and 50 decibels at low speed, quieter than a refrigerator. Older single-stage heat pumps can be louder, especially when defrost cycles run in winter.
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