What should your next HVAC system be? If you’re looking to upgrade or replace your HVAC system, you’ve probably realized the options can feel overwhelming. For most Canadians, the decision narrows down to a furnace or a heat pump, and that’s where the dilemma (and hours of research) begins. Both systems heat your home, but they do it in very different ways. They also differ in cost, efficiency, maintenance, and how they affect your home’s air quality. So, which one should you choose? Let’s break down the heat pump vs furnace debate. What is a furnace? A furnace is a traditional heating system that generates heat by burning fuel or running on electricity. The hot air it generates is then circulated in your home through a series of ducts. The type of furnace depends on the fuel source: Oil furnace: Produces strong, consistent heat but is expensive to operate. Gas furnace: The most popular choice in Ontario and western Canada, since natural gas is readily available and cheap in those regions. Propane furnace: More efficient than natural gas, but propane is pricey. You’ve almost certainly used or encountered a furnace before. It’s the most common way for Canadians to heat their homes, especially across the Prairies where 70% of households in Manitoba and 82% in Alberta still rely on forced air furnaces for space heating. While furnaces are a reliable, proven technology, they entail massive fuel costs, maintenance, and greenhouse gas emissions. What is a heat pump? A heat pump is a versatile heating and cooling system that uses electricity to transfer heat from one place to another. Unlike traditional heating systems that use combustion to generate heat, a heat pump merely moves it. Let’s look at air-source heat pumps as an example. In the winter, an air-source heat pump extracts heat from the outside air and moves it inside. In the summer, it reverses this process and works like an air conditioner to cool your home. There are three main kinds of heat pumps: Air-source heat pump: The most common type of heat pump in Canada, it draws heat from outdoor air. Ground-source (geothermal) heat pump: Taps into underground wells for stable, year-round efficiency. Water-source heat pump: Uses nearby bodies of water as the heat source. With a heat pump, you’re essentially combining your furnace, air conditioner, dehumidifier, and air filter all in one system. Heat pumps may have entered the public consciousness only a few years ago, but the technology behind them has been around for decades. Already common in many parts of Europe, their adoption in Canada is growing rapidly; by 2030, heat pumps will account for over 10% of total home heating in Canada. By 2050, this is expected to go up to 99%. How do furnaces and heat pumps work? How are they different? TLDR: Furnaces burn fuel to generate heat and blow it throughout your house. Heat pumps use electricity to move heat from the ground, outdoor air, or a nearby body of water and release it inside your house. They don’t generate heat from scratch. A furnace uses burners, a heat exchanger, and a blower fan to push heated air through your ducts. Heat pumps, on the other hand, use refrigerant and a compressor to move heat into (or out of) your home. Air-to-air heat pumps rely on one or more air handlers to distribute the heat, while air-to-water heat pumps will use a hydronic system – like radiators or in-floor heating – to heat the home. Furnaces generate heat through combustion. Furnaces can use natural gas, oil, propane, or electricity. A heat pump runs on electricity and uses a refrigerant to extract thermal energy from a source – like the ground, the outdoor air, or a nearby body or water – and move it indoors to heat your home. No combustion is involved in this entire process. Modern-day heat pumps can efficiently transfer heat to your home even during sub-zero temperatures. In fact, cold-climate heat pumps can continue to provide some heating even when the outdoor temperature reaches -30°C. Heat pump vs furnace - pros and cons Initial cost One of the biggest concerns when you’re choosing between a furnace and a heat pump is which costs more. The cost depends on where you live, what type of home you have, and your existing HVAC system. Furnaces typically have a lower upfront cost than heat pumps. Installation costs for a furnace mostly range between $2,500 to $6,000, depending on its efficiency and size, with the average price falling between $4,000 and $6,000. This number can be lower if you’re switching from one furnace to another since your house will already be equipped with ductwork. Heat pumps tend to be more expensive, with the average installation cost coming up between $5,000 and $10,000. A good quality cold-climate central heat pump could cost even more than that. Switching to a heat pump could also require electrical upgrades or additional ductwork modifications, raising costs. However, remember: a heat pump will replace your furnace and your air conditioner, combining two systems in one. Given that, a heat pump can be a better investment. Of note: Federal and provincial governments are currently encouraging homeowners to switch to electric heating through heat pumps, and may cover a major chunk of that cost. If your system qualifies for a government rebate, you could pay little to nothing to switch to a high-efficiency heat pump, or the cost to do so might be comparable to a standard furnace. Any expenses on top of that can be earned back via energy bill savings over the lifetime of the equipment. Operating and maintenance costs This is where heat pumps are superior. Many homeowners prefer gas furnaces since natural gas prices are generally lower than electricity rates. However, these “savings” can be misleading. Gas furnaces require regular inspections to detect leaks and prevent the risk of carbon monoxide poisoning. They also come with a fixed monthly connection fee, which you’ll pay year-round, even during the summer when you’re not using any gas. Meanwhile, an oil furnace will require ongoing fuel purchases. An average Canadian household using oil for space heating needs around 1,350 litres a year; in Atlantic provinces this rises to around 1,500 litres. This means you could be spending $2,000 to $4,000 annually on heating fuel alone. Heat pumps are cheaper to operate since they move heat rather than creating it. This process consumes significantly less energy, allowing them to deliver 1.5 to 3 times more heating energy than the electricity they consume. A Canadian household switching from oil-fueled space heating to a heat pump can save an average of $1,000 to $3,500 a year in utility bills. Switching to a heat pump as your primary heating source could also lower your monthly home insurance premiums, especially if you're replacing a higher-risk system like oil or wood. Utility and versatility Heat pumps are hands down more versatile than furnaces, since they provide both heating in the winter and cooling in the summer. This means you only need to purchase and maintain a single system to receive year-round comfort. Since furnaces can only heat, you’ll need to buy and install an air conditioner if you want to cool your house in the summer. With Canada warming at twice the global average and the number of +30°C days projected to quadruple by the second half of this century, cooling is becoming a necessity in many parts of the country. Energy use and bills Heat pumps win the battle when it comes to energy efficiency. Unlike furnaces, which burn fuel to generate heat, heat pumps simply transfer heat and use far less energy in the process. In fact, they can deliver more energy than they consume. No fossil-fuel-powered furnace is 100% efficient because some energy from the fuel is always lost as waste heat or exhaust gases. A furnace’s efficiency is measured by AFUE (Annual Fuel Utilization Efficiency). A standard furnace achieves around 80% AFUE while modern, high-efficiency models reach up to 95-98%. Thus, even the highest-efficiency furnace can only convert 95-98% of the fuel it consumes into heat. The remaining 5% is expelled as exhaust. Heat pumps use HSPF (Heating Seasonal Performance Factor) and SEER (Seasonal Energy Efficiency Ratio) ratings to measure heating and cooling efficiency, respectively. Modern heat pumps have HSPF ratings of 8-10, and an efficiency of around 300%, which means they produce three units of heat for every unit of electricity they consume. Ease of installation How easy the installation is depends on a few factors: whether you’re retrofitting an existing home or outfitting a new build, what HVAC system you already have, and whether there is ductwork in place. If you have existing ductwork in the home, installing either a heat pump or a furnace is usually straightforward, with minimal disruption or extra cost. Without ductwork, however, a central heat pump can be expensive to install, although ductless mini-split systems offer a simpler alternative. Similarly, installing a furnace from scratch would mean adding ducts and vents, which often requires opening up walls. In some cases, upgrading the electrical panel may be necessary before installing a heat pump to prevent issues like tripped circuit breakers or, in extreme cases, fire hazards. This can be significantly expensive and extend the installation timeline. However, smart home solutions like load managers are now being used to bypass these electrical upgrades and make sure the heat pump receives the power it needs to operate at maximum efficiency without exceeding the home’s electrical capacity. Maintenance Regular upkeep is key to extending the lifespan of any system. Regardless of whether you choose a heat pump or a furnace, recurring maintenance will be necessary to make your system last longer and operate more efficiently. A furnace can be simpler to maintain since it only operates in the winter, while a heat pump runs all year long and needs more frequent attention. There are also fewer moving parts in a furnace, making it less likely to break down. However, if you go with a furnace, you may find yourself maintaining two systems instead of one—a furnace in the winter and an air conditioner (if you have one) in the summer. Heat pump maintenance requires: Changing air filters every 1-3 months Professional maintenance ideally twice a year Keeping outdoor units clear of debris and foliage Refrigerant checks Furnace maintenance can be simpler: Changing air filters every 1-3 months Annual professional inspection just before the winter Leak checks for gas furnaces Cleaning burners Performance Traditionally, furnaces performed well regardless of the outdoor temperature, consistently delivering heat even in deep sub-zero conditions. Heat pumps, by contrast, worked better in moderate temperatures. The colder it got, the harder it was for them to draw heat from the outside air, which made them less reliable in harsh winters. So, the old rule of thumb was: heat pumps for mild winters, furnaces for frigid ones. This is no longer true. Today’s cold-climate heat pumps operate efficiently even down to -30°C across all Canadian climates. They provide steady comfort while typically costing less to run than a furnace. That said, if temperatures drop below a heat pump’s operating threshold, a backup heating source may be required which can increase costs. This only happens on the coldest days of the year. Lifespan A well-maintained furnace can last 20 years or more, while even the best-maintained heat pump typically lasts 12–15 years. Lifespan depends on several factors: system size, installation quality, maintenance frequency, usage, and operating conditions. Electric furnaces generally have fewer mechanical components than heat pumps, which means fewer opportunities for them to break down. Heat pumps, on the other hand, run year-round for both heating and cooling and rely on more complex components, so wear and tear is naturally higher. Safety, sustainability, and air quality Heat pumps produce no direct emissions, since they run on electricity to heat and cool your home. Furnaces, in contrast, typically burn fossil fuels like natural gas, oil, or propane, releasing carbon dioxide and other pollutants directly into the environment. Oil and gas furnaces also carry risks of carbon monoxide leaks and even explosions, and emit carcinogenic compounds that can affect respiratory and cardiac health. In 2022, Canadian households produced 29.4 mega tonnes (Mt) of carbon dioxide emissions (CO2e) from space heating, out of which 23.6 Mt of CO2e came from natural gas alone. Switching from a gas furnace to a heat pump could reduce a household’s daily CO2 emissions by 7.58 kg. Heat pumps actively filter indoor air, removing harmful PM2.5 particles—a major benefit for homes with allergies or pets. They also include dehumidifying features to maintain comfortable humidity levels year-round. Both furnaces and heat pumps include automatic shut-off switches and leak detectors to prevent fuel or refrigerant hazards. Operation, noise A typical furnace operates at about 40–70 dB. Some older models can be particularly loud and disruptive when they kick on with a strong blast of air. The exact noise level depends on the location of the blower motor and the layout of your duct system. Modern heat pumps tend to be quieter than furnaces since they don’t need to cycle on and off very frequently, avoiding sudden bursts of noise. The low hum of a heat pump working to heat or cool your home is about the same noise level as a conversation or your fridge running in the background. While they can get slightly louder in the winter, this only lasts a few minutes while the compressor is working hard or when the heat pump switches to defrost mode. However, placement matters here, too. An outdoor unit located close to a bedroom window will be more noticeable, though noise can be reduced with barriers like fencing or landscaping. For both furnaces and heat pumps, the older the model is, the noisier it gets due to wear and tear and strain. Source Noise Level Whispering 20-30 dB Heat Pump’s Indoor Unit 18-30 dB Heat Pump’s Outdoor Unit 40-60 dB Refrigerator 50 dB Normal Conversation 55-65 dB Standard Air Conditioner 50-75 dB Dishwasher 55-70 dB Ringing Telephone 80 dB Source: Center for Hearing and Communication The bottom line: Which is the better option for Canadian Winters? Heat pump or furnace? Deciding whether to replace your HVAC system with a furnace or a heat pump depends on several factors, including the climate you live in, the existing layout of your home, and installation costs. Heat pumps are more energy-efficient than furnaces and can save you money over the system’s lifetime, though they come with a higher upfront cost. Furnaces might have a lower upfront cost, but have higher operating costs, and are generally being phased out. Your choice should balance initial investment against long-term energy savings while considering your local weather patterns. In regions where the temperature drops down to -30°C, modern cold-climate heat pumps are the better long-term investment for efficiency and cost savings. If you already have a furnace and live in an area with frequent sub-zero temperatures, keeping it as a backup system can provide extra peace of mind. In case you qualify for government incentives and can knock a few thousand dollars off your project, a heat pump might be the obvious choice. Whatever it might end up being, your decision should keep in mind not just initial, upfront costs, but also long-term value. Considering getting a heat pump? We can help. Try our three-minute online pricing tool to find an option best suited for your heating and cooling needs and see exactly how much it will cost you. You can also browse through our selection of mini-split heat pumps or central ducted systems and make a smart choice today.
