Ottawa's new $10,000 heat pump rebate: who should actually take it
The new National Heat Pump Rebate pays up to $10,000 below the median income and $2,000 above it. Whether it pays off depends on the fuel you're replacing — here's the math for oil, electric and natural gas homes.
On October 8, Ottawa announced a new National Heat Pump Rebate: up to $10,000 for households below the median income and $2,000 for everyone else. Approvals take 24 hours and you can stack it on provincial rebates. It opens in early 2027.
That's real money. But the rebate isn't what decides whether a heat pump pays off. The fuel you're replacing is. For a home heated with oil, propane or electric baseboards, this is close to a no-brainer. For a home on natural gas, especially in Ontario, the math is a lot closer than the headline suggests.
A rebate lowers the price of the heat pump. It doesn't change the price of the electricity you'll run it on for the next 15 years.
What Ottawa announced
- Up to $10,000 if your household is below the median income. Everyone else who qualifies gets $2,000.
- Cold-climate air-source heat pumps only, chosen from a federal eligible-products list.
- No energy audit, before or after. You apply online, get approval within 24 hours, install, upload receipts, and payment is approved within five days.
- One rebate per person. If a landlord uses it on a rental, they can't also claim it for their own home.
- Stacks with provincial programs.
- $2 billion over eight years, enough for up to 820,000 households.
The program is built for the moment most people actually replace a heating system: when it breaks. Ottawa says more than 80% of replacements happen after a system fails without warning. You don't need a breakdown to apply, though.
It fills the gap left by the federal Oil to Heat Pump Affordability grant, which stopped taking applications on July 31, 2026. If you're already in that program, final receipts are due January 31, 2027.
What provinces offer right now
The federal rebate stacks on top of these. Every program here requires approval before installation or has strict product rules, so line up the paperwork before you sign a contract.
| Province | Program | What you can get | Catch |
|---|---|---|---|
| Ontario | Home Renovation Savings | Electric, oil, propane or wood heat: $1,250 per ton, up to $7,500 (ground-source up to $12,000). Natural gas: $500 per ton, up to $2,000 (ground-source $3,000) | Pre-approval is mandatory, you need a participating contractor, and new builds don't qualify |
| Ontario | Energy Affordability Program | A free cold-climate heat pump for income-eligible oil-heated homes | Income test, and capacity is limited |
| B.C. | CleanBC Energy Savings Program | Fossil-fuel to central heat pump: $13,000 / $7,000 / $3,500 by income tier | Cut on July 6, 2026. Electric-to-heat-pump rebates are now lowest-income tier only |
| Quebec | LogisVert | $120 per 1,000 BTU/h for cold-climate models ($50 for standard) | Only for homes already heated mainly by electricity |
| P.E.I. | Provincial rebates | Ended April 15, 2026 | Free-heat-pump program is also closed |
In Ontario, an oil-heated home below the median income could put up to $17,500 toward the job ($10,000 federal plus $7,500 provincial). A gas-heated home above the median gets $4,000 ($2,000 plus $2,000).
The number that decides it: your fuel price spread
A heat pump doesn't make heat. It moves heat, so it delivers 2 to 4 units of heat for every unit of electricity it uses. Engineers call this the coefficient of performance, or COP. It's lowest on the coldest days. A high-efficiency gas furnace turns 90% to 98.5% of its fuel into heat.
Whether that efficiency saves you money depends on what each unit of energy costs.
- Against oil, propane or baseboards, the heat pump wins easily. Ottawa estimates average savings of more than $1,400 a year for those homes. Against baseboards, a COP of 2.5 to 3 cuts the electricity used for heating by 60% to 67%.
- Against natural gas in Ontario, it's close or worse. Since the consumer carbon charge went to zero in April 2025, Enbridge puts Ontario electricity at roughly 4 times the cost of gas for the same energy, even after the Ontario Electricity Rebate. At that spread, a heat pump has to average a COP of about 3.8 just to match a 95% furnace.
Here's what that means for running costs against a 95% gas furnace at a 4:1 spread:
| Heat pump's season-average COP | Running cost vs. gas furnace |
|---|---|
| 2.5 | About 50% more |
| 3.0 | About 27% more |
| 3.5 | About 9% more |
| 3.8 | About the same |
Two things soften this. The rebate went up to 23.5% in November 2025, which has narrowed the spread somewhat. And if you go fully electric and close your gas account, you stop paying the fixed monthly gas charge. Still, most gas-heated Ontario homes shouldn't count on a heat pump lowering their heating bill.
Who it makes sense for
| Your heat today | Rebates in Ontario (below / above median income) | Running costs after | Verdict |
|---|---|---|---|
| Oil or propane | Up to $17,500 / $9,500 | About $1,400 a year lower on average | Strong yes. With heating oil up 44% year over year, the payback is fast |
| Electric baseboard or furnace | Up to $17,500 / $9,500 | 60–67% less electricity for heating | Strong yes. Ductless mini-splits work in homes without ducts |
| Natural gas, furnace and AC both near end of life | Up to $12,000 / $4,000 | Likely 10–50% higher | Get quotes. You'd be replacing two machines with one, and AC is included |
| Natural gas, furnace working fine | Up to $12,000 / $4,000 | Likely 10–50% higher | Usually wait until the furnace is due |
Installed heat pumps commonly run $8,000 to $19,000, depending on the home and the ductwork. For oil, propane and electric homes below the median income, stacked rebates can cover most or all of that, and the savings start on the first bill.
The gas case is about replacement, not savings. It also assumes gas-heated homes qualify federally, which Ottawa hasn't confirmed. If your furnace and air conditioner are both 15 years old, the real comparison is a heat pump against a new furnace plus a new AC. A $4,000 rebate can make the heat pump competitive on upfront cost. A hybrid setup that keeps the furnace for the coldest days can also limit the running-cost penalty, though Ottawa hasn't said whether hybrids qualify.
One warning for lower-income gas households. A $12,000 stack can make the install nearly free. But if your heating bill then rises 25% or more, that cost lands every winter on the budget least able to absorb it. Ask the installer for an estimated annual operating cost, not just the price after rebates.
Are you "below median"?
The jump from $2,000 to as much as $10,000 depends on one line, and Ottawa hasn't defined it yet. The closest guide is the program it follows. The Oil to Heat Pump Affordability grant used median household after-tax income, with thresholds that vary by household size.
For scale, Statistics Canada's latest figures (2024) put median after-tax income at:
- $75,500 across all families and people living alone, nationally
- $79,500 in Ontario
- $108,900 for families of two or more
A household-size threshold will likely land somewhere between those numbers for most homeowners. See where your household sits with our household income percentile calculator.
Should you wait for 2027?
The federal portal is aiming for early 2027. Officials say they're "exploring" making it retroactive. That's not a promise.
- If your system works, wait. Nothing is lost by holding off until the portal opens and the fine print is published.
- If your furnace dies this winter, don't count on federal money for a heat pump installed before launch. Ontario's rebate is available now, but only with pre-approval before installation. Call a participating contractor first, not after.
- If you're oil-heated and already in the Oil to Heat Pump Affordability program, keep your January 31, 2027 receipt deadline. Don't drop it to wait for the new program.
Budgeting for this winter's heating in the meantime? See what a 44% jump in heating oil means for your fill-ups.
The takeaway
The new rebate is generous, fast and stackable. But it pays off for a specific group. If you heat with oil, propane or electric baseboards, this is the best deal you're likely to see. Line up your provincial pre-approval and be ready when the federal portal opens. If you heat with natural gas, treat the rebate as a discount on replacing your furnace and AC when they're due, not a way to lower your bills. Ask every installer for an estimated running cost alongside the price.
Federal program: Prime Minister's Office, announcement, October 8, 2026, and Environment and Climate Change Canada, backgrounder. Oil to Heat Pump Affordability: Natural Resources Canada. Ontario: Home Renovation Savings. Fuel spread and efficiency figures: Enbridge Gas. Ontario Electricity Rebate: Ontario Energy Board. B.C.: CleanBC Energy Savings Program changes, July 2026. Quebec: LogisVert rates. P.E.I.: Government of P.E.I.. Install cost range: Government of B.C. via Richmond Sentinel. Income: Statistics Canada, Canadian Income Survey, 2024. Calculators by Metrestick.