Homeowner Guide· Updated June 2026· Reviewed by ProScore Editorial Team

Heat Pump vs Gas Furnace in Ontario: Costs, Rebates & When to Switch

Heat pump or gas furnace in Ontario? Running costs by fuel, the official 2026 rebates (up to $7,500 air-source, $12,000 ground-source), hybrid systems, and when each makes sense.

Updated November 8, 2026. Every rebate figure below was checked against the official program page on that date. An earlier version said the rebate program was confirmed to run through November 2026; the official site gives no end date, so we have corrected that. This guide now also covers what was in our separate cold-climate heat pump article.

For most Ontario homes heated with oil, propane or electric baseboard, a cold-climate heat pump costs less to run than what they have now, and rebates of up to $7,500 cut the price. For homes already on natural gas, the running-cost difference is smaller and the rebate is up to $2,000, so the decision turns on your electricity rates, your insulation, and whether you also need air conditioning.

Why This Decision Is More Nuanced Than It Looks

Modern cold-climate air-source heat pumps are rated to keep heating well below freezing, down to about -25°C or colder, which covers most Ontario winters. That puts to rest the old worry that heat pumps cannot handle a real Ontario winter.

Gas furnaces are not going anywhere either. There is no gas furnace ban in Ontario. Under federal rules, a gas furnace manufactured on or after July 3, 2019 must have a minimum efficiency of 95% AFUE, so any new furnace you buy today is a high-efficiency condensing model.

The real question is which one makes more sense for your home, your fuel, and your budget.

How Each System Works in an Ontario Winter

Gas furnace. It burns natural gas to make heat. A 95% AFUE furnace turns about 95% of the gas it burns into usable heat.

Cold-climate heat pump. It moves heat from the outdoor air into your home instead of burning fuel. In mild weather, a good unit delivers about three to four units of heat for every unit of electricity it uses. That ratio is called the coefficient of performance (COP). It drops as the weather gets colder, but a cold-climate model still delivers more heat than the electricity it uses well below freezing.

Hybrid (dual-fuel). You do not have to choose. A heat pump can be paired with a gas furnace: the heat pump does most of the heating, and the furnace takes over on the coldest days. Many Ontario homeowners choose this setup because it hedges against both extreme cold and high electricity prices.

Running Costs: Heat Pump vs. Gas Furnace

Your bill depends on three things: the fuel you use now, your utility rates, and how much heat your home loses.

•If you heat with natural gas: gas is one of the cheaper heating fuels in Ontario. Whether a heat pump saves you money depends on your electricity rate plan, your insulation and the model you choose. Many gas-heated homes see modest savings or roughly the same cost. The stronger reasons to switch are cooling and the rebate.

•If you heat with oil, propane or electric baseboard: the case for a heat pump is much stronger. Oil and propane are expensive per unit of heat, and baseboard heaters turn one unit of electricity into one unit of heat, while a heat pump delivers several.

•Cooling: a heat pump also cools in summer. If you do not have central air, one system replaces two, which changes the whole comparison.

On a time-of-use electricity plan, heating more during off-peak hours lowers your effective rate, and a smart thermostat can do that automatically.

Heat Pump Rebates in Ontario: What's Actually Available

The Home Renovation Savings Program is Ontario's main rebate for heat pumps. It is run by Enbridge Gas and Save on Energy with support from the Government of Ontario. The official site lists these amounts:

Current heating	Cold-climate air-source	Ground-source
Natural gas (Enbridge Gas customers)	$500 per ton, up to $2,000	$3,000
Electricity, oil, propane or wood	$1,250 per ton, up to $7,500	$2,000 per ton, up to $12,000

What the program requires:

•A participating HVAC contractor, and pre-approval before the heat pump is installed.

•A qualifying model. A cold-climate air-source unit must be an active model on Natural Resources Canada's qualified products list.

•An eligible home: a single detached, semi-detached, row house, townhome or mobile home on a permanent foundation. Homes occupied for six months or less are excluded, and the owner must apply even if there are tenants. Cornwall Electric customers are not eligible unless the home is primarily heated by Enbridge natural gas.

•No energy assessment is needed for a heat pump on its own.

The official site gives no end date, and rebate programs can change, so confirm the amounts before you sign. For the program's other upgrades and the most common reasons claims fail, see our Home Renovation Savings Program guide.

Federal programs. The Canada Greener Homes Grant and Loan are both closed. A new federal National Heat Pump Rebate is expected to open in early 2027: up to $10,000 for households below the median income and $2,000 for others, for a heat pump on the eligible product list bought from and installed by an HVAC contractor. Installations from November 1, 2026 may qualify, and the federal government says it can be combined with provincial programs.

Gas furnaces. We found no comparable provincial or federal rebate for installing a new gas furnace.

Side-by-Side Comparison

Factor	Cold-climate heat pump	95% AFUE gas furnace
Upfront cost	Higher	Lower
Ontario rebate	Up to $7,500 (non-gas homes) or $2,000 (gas homes)	None found
Heating efficiency	Several units of heat per unit of electricity in mild weather	About 95%
Cooling included	Yes	No, separate air conditioner
Works in deep cold	Yes, cold-climate models	Yes
Carbon monoxide risk	No combustion	Yes; alarms required
Best fit	Oil, propane or electric homes; homes needing cooling	Gas homes with a tight budget and no need for cooling

When a Gas Furnace Still Makes Sense

•Your home is already on gas and your budget is tight. A furnace usually costs less to buy and install, and the $2,000 gas-home rebate may not close the gap.

•Your home leaks heat. Heat pumps are more sensitive to drafts and thin insulation. Fixing the building first, then switching, is often the smarter order.

•Your electrical panel cannot take the load. A heat pump needs a dedicated circuit, and an older home may need a panel upgrade. Get it assessed before you commit.

•You need heat tomorrow. A heat pump takes more planning: sizing, possible electrical work and equipment lead times. An emergency furnace replacement is often faster.

•You lose power often. In rural areas with long outages, a gas furnace is easier to run on a backup generator than a heat pump.

When a Heat Pump Is the Stronger Choice

•You heat with oil, propane or electric baseboard. The running-cost savings are largest, and so is the rebate.

•You need both heating and cooling. One system replaces your furnace and air conditioner.

•You plan to stay 10 years or more. The higher upfront cost has time to pay back, and there is no burner, heat exchanger or flue to maintain.

•You want a hybrid. Adding a heat pump to your existing furnace lets you cut gas use without giving up your backup.

Do I Need a Carbon Monoxide Alarm?

If you keep or install a gas furnace, yes. Under Ontario's Fire Code, a home with a fuel-burning appliance, a fireplace or an attached garage needs a carbon monoxide alarm beside each sleeping area and, since January 1, 2026, on every storey. A heat pump burns no fuel, but if your home keeps any gas appliance, the rule still applies.

Getting the Installation Right

The installation matters as much as the equipment. An undersized heat pump struggles in a cold snap, and a badly installed furnace can be dangerous.

•For a heat pump, look for a contractor who calculates your home's heat loss room by room instead of guessing a size, confirms the model is on the qualified products list, and takes part in the rebate program.

•For a gas furnace, the business must be a TSSA-registered contractor and the installer a certified gas technician.

•For a panel upgrade, you need an ESA Licensed Electrical Contractor. Find [electricians across Ontario](/providers/electrician).

Compare HVAC contractors across Ontario, or search by city: Toronto, Ottawa, Hamilton and London. ProScore's Trust Index scores each one on reputation, credentials, customer sentiment and business transparency.

FAQ

Do cold-climate heat pumps work in Ontario winters?

Yes. Modern cold-climate air-source heat pumps are rated to keep heating down to about -25°C or colder, which covers most Ontario winters. Efficiency drops in deep cold, which is why many homeowners keep a gas furnace as a backup in a hybrid setup.

What heat pump rebates are available in Ontario?

The Home Renovation Savings Program pays up to $7,500 for a cold-climate air-source heat pump in a home heated by electricity, oil, propane or wood, and up to $2,000 in a home heated by natural gas. Ground-source heat pumps get up to $12,000, or $3,000 in gas-heated homes. You need a participating contractor and pre-approval. The Canada Greener Homes Grant and Loan are closed; a new federal National Heat Pump Rebate of up to $10,000 is expected to open in early 2027.

Can I keep my gas furnace and add a heat pump?

Yes. A hybrid or dual-fuel system uses the heat pump for most heating and the furnace on the coldest days. Gas-heated homes can claim up to $2,000 for a cold-climate air-source heat pump through the Home Renovation Savings Program.

Is a heat pump cheaper to run than a gas furnace in Ontario?

It depends on your current fuel. Compared with oil, propane or electric baseboard, a heat pump usually costs much less to run. Compared with natural gas, the difference is smaller and depends on your electricity rates and insulation.

What should I ask an HVAC contractor before getting a heat pump quote?

Ask whether they will calculate your home's heat loss room by room, which model they recommend and whether it is on Natural Resources Canada's qualified products list, whether they take part in the rebate program, whether your electrical panel needs an upgrade, and the total installed cost after rebates.

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