How Much Does an HVAC Installation or Replacement Cost?

Can’t seem to get the temperature comfortable in your home? Has your old furnace finally conked out? Or maybe you’re just looking to save money on your energy bills. Enter the HVAC (heating, venting and air conditioning) contractor. Hiring a pro is not only the best way to manage your heating and cooling needs — from furnace and air conditioning installs and maintenance to ductwork — HVAC contractors offer expert guidance and a safe, reliable service that will save you time and money in the long term.

Homeowners often make one common mistake according to Brendon Aldridge, president of Ontario-based Doctor HVAC which serves Georgetown, Brampton (GTA) and Mississauga. “Buyers sometimes make the mistake of thinking that larger units are better,” he says. “They are not. Slightly smaller is preferable and will be more efficient.”

HVAC installation and replacement cost by type

A home’s HVAC needs include heating and cooling systems. The majority of them use forced air and ductwork to maintain a comfortable room temperature however, there are some outliers, including certain types of heat pumps, and radiant heat from electric baseboards or radiators. Costs range substantially for both types of systems but on average, an AC install project tends to be easier on the budget.   

Air conditioner installation and replacement costs

Wondering how much air conditioning (AC) costs to replace and install? You can expect to pay between $2,500 and $8,000 with the cost to replace an air conditioner averaging around $3,900. Air conditioning options include central air units, which use ductwork to disperse cool air, and ductless units, suitable for small spaces, individual rooms, or homes without ductwork. Size and output of the unit, a home’s square footage and layout, plus existing insulation, factor into the air conditioner replacement cost. 

Furnace installation costs

To cover a furnace installation cost (not including ductwork.), budget between $8,000 and $15,000. Installation takes one or two days, and up to a week if ductwork needs to be added or modified. That extra work bumps the price tag significantly to a total of  $20,000 to $30,000. 

The fuel used to heat a home is a determining factor in selecting a furnace and the total heat system replacement cost. To compare furnace types, compare their Annual Fuel Utilization Efficiency (AFUE) ratings. They measure how much fuel converts into heat compared to the amount of energy that gets lost during the combustion process. 

Here are some of the most common types of heating systems and what to budget for each: 

Natural gas 

This furnace type is popular in Canada since natural gas is a common and typically affordable fuel source. Though more expensive to purchase upfront than other types of furnaces, high-efficiency models can offer energy savings over the long run. Despite a long history of safety, some people avoid natural gas furnaces because they worry about combustibility.
Cost: $5,000 to $7,000 

Electric

The lower upfront cost, efficiency, and smaller size can make electric an attractive option for homeowners. However, they are the second most expensive system to operate in most parts of Canada (more than natural gas furnaces, but less than oil). In Quebec, where the cost of electricity is less than natural gas, electric furnaces are popular. Installation is slightly less expensive than that of a natural gas furnace.
Cost: $4,000 to $6,000

Propane oil

In areas where there is limited access to natural gas, propane-fuelled furnaces are a good option. They tend to be more reliable than electric furnaces, which are more expensive to operate and subject to power outages. They’re also less expensive to operate and cleaner than oil furnaces.

Cost: $5,000 to $7,000

Heat pump installation costs

Despite its name, a heat pump provides both heating and cooling to your home, allowing you to replace your furnace and AC unit. It also doesn’t generate heat like a furnace. Instead, it absorbs heat energy from the outside (even in Canada’s frigid temperatures) and transfers it indoors moves heat from one place to another and absorbs heat energy from the outside (even in cold temperatures) and transfers it indoors. In cooling mode, a heat pump absorbs heat from indoor air and releases it through the outdoor unit.

There is a perception that heat pumps don’t work well in very cold climates. The new generation of heat pumps using technology which ensures they can heat homes with more than twice the efficiency of gas or electric heating, even below temperatures of -17 Celsius.

Cost: $7,000 to $16,000

Since heat pumps use less electricity to operate than other systems, they’re more eco-friendly and therefore could qualify for a green tax credit. The federal Canada Green Homes Initiative offers grants from $125 to $5,000 and interest-free loans of up to $40,000. 

Read more: Home renovation tax credits in Canada 

There are different types of heat pumps available, including:

Air-source

The most common heat pump type used in Canada, air-source heat pumps transfer heat between indoor air and outdoor air. They may reduce greenhouse gases by up to 54 per cent, compared to natural gas options.

Cost: $6,000 to $10,000

Geothermal

Also called ground-source, this type of heat pump transfers heat between the air inside your home and the ground outside. While typically more efficient, they can be more expensive to install than other types of heat pumps because they require drilling into the ground. The good news is that geothermal units have lower operating costs. Bad news? Repairs and diagnosing issues can be more difficult and costly.

Cost: $20,000 to $40,000

Ductless mini split

This is an option for houses without ductwork or to heat individual rooms where ductwork can’t be extended. Mini-split units take up a minimum amount of space and can be set up to provide cooling or heating in multiple zones throughout the home, each with its own thermostat. Though installation costs can be high, they can help lower electricity costs each month.

Cost: $4,000 to $10,000

Dual fuel

Made up of both an electric heat pump and a gas furnace, this hybrid system alternates between the two to maximize comfort according to outside temperatures. At temperatures below 2 Celsius, the furnace takes over and the heat pump turns off. In summer, the heat pump does most of the work, acting like central air conditioning. 

Cost: $7,000+

Gas-fired

Fueled by renewable natural gas produced by decomposing organic waste, this type of heat pump is highly efficient, reducing energy use by up to 35 per cent. There’s a green payoff with lower greenhouse gas emissions (as much as 50 per cent). This new technology is not common in residential use. 

Cost: $4,500 to $8,000

Things that affect air conditioning installation costs

Your HVAC cost varies according to many factors including the size and capacity of the air conditioning unit. Air conditioning systems with the highest energy efficiency ratings will cost more upfront, but save money over time. Add-on features, like air purifiers and humidifiers, also require bigger budgets at the outset. 

New systems may require installing or modifying your home’s ductwork, which is charged according to length and diameter, design complexity, labour, and material used. 

Type of AC system

An air-conditioning system does wonders to beat the heat in summer. Options range from a central air system that works with your furnace to distribute cool air through ductwork to more economical ductless AC units mounted on a wall. The air conditioner installation cost depends on the brand, size, and Seasonal Energy Efficiency Ratio (SEER) rating and additional features (like ultra-quiet operation).

Equipment size and cooling capacity

The price of an air conditioning unit increases as the size and capacity go up. Capacity, measured in British Thermal Units (BTU) indicates how well the unit will cool your home. The level of BTUs needed depends on house size and layout, as well as outside factors such as direct sunlight and the number of windows, according to Brendon Aldridge.

SEER ratings

Seasonal Energy Efficiency Ratio (SEER) is a rating to help homeowners find the most energy-efficient air conditioning. The higher a SEER rating the better. In Canada, the minimum allowable energy efficiency level is 13 SEER. Expect to pay more for a system with higher ratings. Some provinces offer rebates to homeowners who buy AC units with high SEER ratings. 

Ductwork, vents and returns

Ducts transport air pushed out from the heating and cooling units in your home. They deliver air to rooms through vents, then bring it back to the furnace to reheat or to a central air unit to recool (and also to filter) via cold air returns, located in the floor (or close to it) to capture cooled air. Think of this cycle as the way your HVAC system “exhales” and “inhales” to keep air flowing.

Replacing ductwork is charged according to the length of the path from it to the furnace and the material chosen. Per linear foot, the average cost ranges from $35 to $55 (including materials and labour). Most ductwork is made from highly durable galvanized steel or aluminum, which is the costliest option. Fibreboard (the most inexpensive option), fibreglass and flexible ducts made from flexible steel spring coils covered in thick plastic (suited to tight spaces) may also be used.

Adding a vent to connect to a duct can cost $1,000 to $4,000, depending on the amount of construction needed. The biggest expense for homeowners is retrofitting an existing house where there aren’t ducts. Holes need to be cut in walls and floors for vents and returns, and ducts may need to be installed throughout, adding significantly to HVAC cost.

Zones and controls

A zone control system can boost central air and furnace efficiency. It works by opening and shutting motorized dampers that are located throughout the ductwork. The dampers function like on-and-off valves for air, allowing hot or cold air to be blocked or released. A thermostat control panel sets the temperature in designated zones of your home to eliminate cold spots and customize the temperature in individual rooms. 

Financing your HVAC installation or replacement

The HVAC cost for installation or upgrades can quickly add up. Homeowners may want to consider renovation financing options, like monthly payments, and applying for tax credits, federal or provincial government rebates for green or high-efficiency systems and promotions. Ask your HVAC company or contractor for more details.

Just about any Canadian who has suffered through subzero winters or punishingly humid summers can attest to the central role a functioning heating and cooling system plays in the comfort of their home. The key to a healthy HVAC system is, of course, regular maintenance. But when the time comes to have to install or completely replace it, avoid those uncomfortable experiences and work with a seasoned HVAC professional to select the right one.   

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With so much to think about when it comes to repairing or installing a new HVAC system, it’s important to find an HVAC contractor you can trust. Get up to three free HVAC quotes from trusted local HVAC professionals, learn more about HVAC renovations, and talk to an expert about renovation financing.