Replacing Your Furnace in Canada: AFUE, Sizing and Cost

Replacing your furnace in Canada is a decision you will live with for 15 to 20 years. Most homes replace an old gas furnace with a high-efficiency model rated about 95% AFUE or higher, sized from a proper heat loss calculation. Installed cost depends on your home, the furnace type and how much venting or ductwork needs changing.

Before you sign a quote, compare a furnace with a heat pump or a hybrid system. In some provinces a heat pump costs less to run, and heat pumps often qualify for rebates that a furnace does not.

Signs it is time to replace your furnace

• The furnace is 15 to 20 years old or older.
• Repairs are frequent or a major part like the heat exchanger has failed.
• Rooms are unevenly heated and the furnace runs constantly.
• Your gas use has climbed without a change in habits.

A furnace that still works is not always worth replacing early. Going from 92% to 96% efficiency saves only a few percent on gas. Planning ahead does let you compare options calmly instead of buying in an emergency.

What AFUE means

AFUE, or Annual Fuel Utilization Efficiency, is the share of fuel energy that becomes heat in your home over a season. A 95% furnace turns 95% of the gas energy into heat and loses about 5% up the vent.

If you are replacing a 65% furnace, a 95% model cuts gas use for heating by roughly a third. If you are replacing a 90% model, the savings are small.

Single-stage, two-stage and modulating

A single-stage furnace runs at full output or off. A two-stage furnace has a low setting for mild weather. A modulating furnace adjusts in small steps. Two-stage and modulating models give steadier temperatures and quieter operation. They cost more and save only modestly on gas.

Getting the size right

Many Canadian homes have furnaces that are larger than they need, especially after insulation or window upgrades. An oversized furnace short-cycles, which wears parts faster and leaves rooms uneven.

• Ask for a room-by-room heat loss calculation, not a rule of thumb based on square footage.
• Ask the installer to check that your ducts can handle the airflow.
• If you plan to add insulation or air sealing soon, do that first or factor it into sizing. See air sealing first and attic insulation R-values.

Furnace replacement cost ranges

Installed prices vary a lot by region, brand, venting work and season. Treat these as typical ranges and get at least three quotes.

Converting from a mid-efficiency or chimney-vented furnace to a condensing model may add venting and drain work. An older chimney may need a liner if a water heater still uses it.

When to choose a heat pump instead

A heat pump is worth a serious look when:

• Gas is expensive relative to electricity. At approximate 2026 prices, heat pumps typically cost less to run than gas in BC, Quebec, New Brunswick and Nova Scotia. Our heat pump vs gas furnace guide shows each province.
• Your AC is also old. A heat pump replaces both. See central AC vs heat pump.
• You heat with oil or propane. Savings are usually large.
• Rebates are available. Ontario's Home Renovation Savings Program offers up to $7,500 for a cold-climate air-source heat pump. Check our rebates page for your province.

A gas furnace is still often the lower-cost choice to run in Alberta, Saskatchewan and, at current prices, Ontario and Manitoba. Even there, a hybrid dual-fuel system can add efficient heat in mild weather and summer cooling.

Questions to ask before you buy

1. Did you do a heat loss calculation for my home?
2. What is the AFUE and the warranty on the heat exchanger and parts?
3. What venting, drain or duct changes are included in the price?
4. Can you also quote a heat pump or hybrid option for comparison?

Use our heat pump calculator to compare running costs, and read questions to ask installers before choosing a contractor.