Furnace Replacement Cost in Ontario: What to Expect & When to Upgrade

A new furnace could cost anywhere from $2,000 to $7,000 to install. The price primarily depends on the type of furnace you choose, the condition of your living space, and the amount of BTUs required for your specific needs. Always ask for a breakdown of your quote and estimate.

How much does furnace replacement cost in Ontario, exactly? Labour fees and equipment prices vary so widely that two quotes for the same home differ by a wide range. It’s why many homeowners second-guess whether their HVAC technician is trying to upsell them.

Having a new furnace installed is a significant investment, and it’s not something you’d want to skimp on. But you don’t need to settle for the cheapest quote. 

To help you make an informed decision, let’s break down the average furnace replacement cost, the factors that affect pricing, and how to determine whether repair or replacement is the smarter option for your home.

Furnace Replacement Cost in Ontario: Average Pricing You Can Expect 

The average cost of installation primarily depends on the type of unit you select. Gas and electric furnaces have different price tiers, and you’ll notice that gas furnaces generally cost more. Here’s a quick overview:

Why does a new furnace installation cost so much? Although HVAC companies have different packages, you’ll generally be paying for the following:

• Equipment: The majority of the final cost comprises the furnace itself, including the blower assembly, heat exchanger, and efficiency components.
• Labour Costs: Furnace replacement is a specialised job involving multiple steps. HVAC specialists remove your existing furnace and assess your space for retrofitting before they can begin the installation, all of which adds to the total bill.
• Old Furnace Disposal: You’ll need to cover the necessary removal and disposal fees, especially for older furnaces with outdated venting systems.
• Basic Duct Adjustments: Technicians may need to resize or seal the ducts to match the new furnace’s airflow requirements.
• Thermostat Compatibility Checks: Specialists check if your thermostat is compatible with your new multi-stage or high-efficiency system to prevent malfunctions.
• Safety and Code Compliance Checks: Your installation has to meet the requirements for CO testing, venting clearance, gas pressure checks, carbon monoxide leak testing, and municipal code requirements.

What Affects the Cost of a Furnace Replacement in Ontario? 

Furnace pricing shifts based on BTU requirements, building age, venting conditions, and efficiency upgrades, all of which vary drastically across neighbourhoods. Let’s take a closer look at each factor:

Home Size and Heating Load 

Home size is just one factor to consider when calculating the heating load. The following impacts your British Thermal Unit (BTU) needs:

• Local winter temperatures
• Wall insulation
• Window quality
• Basement heat loss
• Air leakages

BTU sizing must match the home’s actual heat loss rate. For instance, modern homes in Ontario typically require 40 to 60 BTUs per square foot, but drafty older homes or properties with finished basements may require significantly more. 

Note: If you opt for smaller sizing just to save money, your system will constantly cycle, driving up your energy bills. Select the most suitable unit for your home’s heating load to achieve better energy efficiency.

Furnace Efficiency Rating 

Annual fuel utilization efficiency (AFUE) measures the percentage of fuel your furnace converts into usable heat. For example, a 96% AFUE furnace converts 96% of its fuel into heat, while only spending 4% on exhaust gases. On the other hand, furnaces with a 60% rating waste up to 40% of their fuel when operating.

• High-efficiency furnaces cost more upfront, but they operate with less strain on components, meaning fewer minor repairs and consistent monthly energy savings.
• Lower-efficiency models may be cheaper to install, but their higher fuel use quickly offsets the initial savings. The wasted energy spikes heating costs, increases carbon emissions, and blows more harmful pollutants into your living space.

If you want long-term value, quieter performance, and lower utility costs, upgrading to a high-efficiency furnace is the smarter investment.

Source: Unsplash

Installation Complexity and Code Requirements 

Another critical factor is job complexity. The more work required to install a new furnace in your living space, the higher the total bill.

For example, older homes with outdated venting systems (e.g., metal Type-B vents, shared chimney flues) aren’t compatible with high-efficiency furnaces. You’ll have to upgrade to PVC venting or reroute exhaust/intake lines. 

Gas furnaces are also generally more complex than electric models. Upsizing gas lines is a more specialised, technical task than reworking an electrical panel. Your technicians would have to verify capacity and pressure to meet TSSA standards.

Add-Ons That Increase Cost 

Add-ons aren’t mandatory, but they could improve the overall indoor air quality that your heating system delivers. Here are some common add-ons that an HVAC professional might offer:

• Smart Thermostats: Improve efficiency through scheduling and adaptive heating.
• Whole-Home Humidifiers: Use humidifiers to prevent dry winter air, protect hardwood, and improve comfort.
• Air Purifiers and HEPA Filters: These filters remove microscopic pollutants and allergens from the air, making them suitable for allergy-prone households.
• UV Lights: You can install them in the plenum to reduce microbial growth, although they need an electrical hookup and proper mounting space.
• New AC Coil: It’s necessary to verify refrigerant compatibility and correct airflow by installing a high-efficiency furnace with a new AC coil.

Source: Unsplash

Furnace Replacement vs. Furnace Repair: How to Decide 

Furnace issues don’t always require a full replacement. Some problems can be resolved by troubleshooting or calling a technician for repairs. If your system is older, inefficient, or frequently breaking down, however, replacement may be a more cost-effective option. 

That said, the safest approach is to get a professional assessment. LG Home Comfort technicians evaluate your system’s BTU load, safety risks, and projected long-term operating costs to determine the most practical solution. 

Call for help if you notice the following:

• sudden spikes in your energy bill
• uneven heating across rooms
• frequent cycling or short cycling
• loud rattling, banging, or grinding noises
• burnt smell or unusual odours during operation
• yellow burner flame instead of blue (possible CO issue)
• furnace is struggling to reach the set temperature
• repeated breakdowns within the same year
• system is 15 to 20+ years old
• poor airflow even after filter replacements

Whether you need a targeted repair or a complete home furnace replacement, we ensure you choose the option that protects your comfort and budget.

Learn more: The Ultimate Guide to Buying A New Furnace

FAQs About Home Furnace Replacement in Ontario

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

Most homeowners spend between $4,000 and $6,750 on a full furnace replacement. The final upfront costs depend on the type of furnace, its BTU size, and the complexity of the installation. For example, if you’re looking for a natural gas furnace with a high efficiency rating, expect to pay a premium price.

Should I replace my furnace and air conditioner together?

Most HVAC companies recommend replacing your old furnace and air conditioning system simultaneously if they’re close in age. Your AC uses the furnace to circulate air throughout your home. If these two are incompatible, you’ll compromise energy efficiency and create airflow issues. 

How long does a furnace replacement take?

Installing a new furnace typically takes between four and eight hours. More complex projects, such as those that require modifying existing ductwork, adjusting gas lines, or performing electrical upgrades, may take an entire day. Old furnace removal and space retrofitting, when necessary, also add to the total time.