Heat Pump vs Furnace in Ontario

Ask ten contractors whether you should get a heat pump and you may get ten answers. The honest one is that it depends on what you heat with now, what you pay for energy, how long you plan to stay, and whether your air conditioner needs replacing anyway. This guide sets out the trade-offs for a typical house around Hamilton, Burlington and Haldimand in 2026.

How each one heats

A gas furnace burns natural gas or propane and blows the heat through the ducts. A modern one turns about 95% of the fuel’s energy into heat in the house. A heat pump does not burn anything. It uses electricity to move heat from the outdoor air into the house, and because moving heat takes less energy than making it, it delivers two to four units of heat for each unit of electricity over a season. The colder it gets outside, the harder it works and the lower that ratio becomes. Our guide to how a heat pump works explains why.

Can a heat pump handle a Hamilton winter?

Yes, if it is a cold-climate model. Hamilton’s design temperature, the cold the system is sized for, is around −18 °C, and the city sees only a handful of nights colder than that in a typical winter. Cold-climate air-source heat pumps listed on the NEEP and Natural Resources Canada qualifying lists keep producing useful heat at −20 °C and below, with reduced output. Every heat pump system in this climate needs backup heat for the coldest hours: either an electric heater in the air handler or the existing gas furnace.

Running cost: the honest numbers

This is where the answer depends on your fuel.

• Against natural gas: since the federal consumer carbon charge on natural gas was removed in April 2025, gas has become cheaper to burn in Ontario. At typical 2026 rates, a cold-climate heat pump in a Hamilton winter costs more to run than a gas furnace, often a few hundred dollars a year more for an average detached house. An overnight electricity rate plan narrows the gap, but rarely closes it.
• Against propane: propane is expensive per unit of heat, and a heat pump is usually much cheaper to run.
• Against heating oil: the same, often the largest saving of all.
• Against electric baseboard: a heat pump uses roughly a third to a half of the electricity for the same heat.

Put your own usage and prices into the heat pump vs gas calculator. Use the per-unit charges on your bills, because the fixed monthly gas customer charge stays as long as you keep any gas appliance connected.

Up-front cost

A gas furnace replacement typically costs $4,500 to $8,000 installed. An all-electric cold-climate heat pump system runs $12,000 to $20,000, and it may need an electrical service upgrade. A hybrid setup, a heat pump in place of the air conditioner sitting on a gas furnace, usually costs $8,000 to $14,000 for the heat pump side. See the new furnace cost guide for the furnace side.

The fair comparison is not heat pump against furnace, but heat pump against furnace plus air conditioner, because a heat pump replaces the AC too. If your AC is near the end of its life, the extra cost of choosing a heat pump is much smaller.

Rebates

The Home Renovation Savings Program offers rebates on qualifying cold-climate heat pumps. Homes heated with electricity, oil, propane or wood can receive up to $7,500 for an air-source system; homes heated with natural gas get a smaller amount. The contractor usually has to register the job before installation. Details are in heat pump rebates in Ontario.

The hybrid option

For most Hamilton homes on natural gas, the practical middle ground is a hybrid, sometimes called dual fuel. The heat pump handles cooling and heats the house through the mild and moderate parts of winter, which is most of the season. Below a switchover temperature the gas furnace takes over. Where to set it is a choice: at 2026 prices gas is usually the cheaper source of heat once it is colder than about 5 to 10 °C outside, so an owner focused on cost sets the switchover high and lets the heat pump work mainly in spring and fall, while an owner focused on emissions sets it lower, around −5 to −10 °C, and accepts a somewhat higher bill. Either way you keep the reliability of gas on the coldest nights.

Comfort

Heat pumps deliver air that is warm rather than hot, around 30 to 40 °C at the register, and run long, gentle cycles. Some people love the even temperature; others miss the blast of hot air from a furnace. Variable-speed heat pumps are quiet indoors, and the outdoor unit is about as loud as a modern air conditioner. Gas furnaces heat a cold house up faster after a deep setback, so heat pumps work best with a steady setting.

Emissions

Ontario’s electricity grid is mostly nuclear and hydro, with natural gas plants filling peaks, so heat from a heat pump in Ontario produces far lower emissions than heat from burning gas in a furnace. For owners whose priority is cutting the home’s carbon footprint, that is a strong argument on its own, and a hybrid system captures most of it while keeping gas for the coldest hours.

Who should switch

• Strong case: homes on propane, oil or electric baseboard; homes whose AC needs replacing; owners planning to stay many years or leave gas entirely.
• Reasonable case: gas homes replacing the AC anyway, as a hybrid, where the heat pump’s added cost is modest and the furnace stays for cold weather.
• Weaker case: gas homes with a newer furnace and AC that both work. A heat pump will not pay for itself on running costs alone; the reasons to do it are emissions and comfort.

Getting quotes

Send one request and ask the contractor to price a hybrid heat pump, an all-electric heat pump and a straight furnace and AC replacement side by side, with the expected rebate. Read heat pump installation for what the job involves.