By Mario Vaghei, General Manager, Aire One Peel Heating & Cooling · Published January 10, 2025 · Facts verified September 3, 2026
HVAC efficiency and insulation are usually discussed as two separate purchases, and that is the mistake. A furnace or air conditioner is sized to the heat a house loses or gains, so every centimetre of insulation you add before the equipment is chosen changes what size of equipment you should buy. Do it in the other order and you pay for capacity the house no longer needs, then run it in short cycles for fifteen years. This page sets out where a Peel Region house actually loses its heat, what Ontario’s code asks of a new envelope, and the order of operations that gets the smaller bill. If you are only after the furnace numbers, our furnace size guide has the chart.
On this page
- Where does a house actually lose its heat?
- What does Ontario’s code require for insulation?
- What does each insulation material give you per inch?
- How does insulation change HVAC efficiency and furnace size?
- What do Peel Region permits ask for?
- Insulate first, or replace the equipment first?
- Frequently asked questions
- Final verdict
Short answer
Insulation sets HVAC efficiency because equipment is sized to the heat a house loses through its envelope. Natural Resources Canada puts basements at about 25 per cent of that loss and walls at about 20 per cent, and Ontario’s code asks new attics for R-60. Insulate before you buy the furnace, and the furnace you need gets smaller.
Where does a house actually lose its heat?
A house loses most of its heat through the basement and the walls, not through the attic that everyone insulates first, and that split is where the HVAC efficiency conversation should start. Natural Resources Canada’s Keeping the Heat In guide states that “basements can account for about 25 percent of a home’s total heat loss” and that “walls can account for about 20 percent of heat loss in houses”, and it notes that “most other areas, such as basements and uninsulated walls, lose more heat than the typical attic.” The attic gets done first because it is easy to reach, not because it is the biggest hole. On mechanism, NRCan is equally plain: “conduction and convection are the main causes of heat loss; convection is the main culprit when the house is leaky.” Convection is air movement, which is why draft sealing sits beside insulation rather than after it.
| Part of the house | Share of heat loss (NRCan) | What it means for the furnace |
|---|---|---|
| Basement | About 25 per cent | The largest single load, and the one most often left at zero insulation |
| Walls above grade | About 20 per cent | Hard to upgrade without opening them, so it is done at renovation time |
| Attic | Less than basements or uninsulated walls | Cheapest to top up, so it is still the right first job |
| Windows, by radiation | Under 10 per cent | Replacing windows for energy alone rarely pays; do it when they are due anyway |
| Air leakage, everywhere | The main culprit in a leaky house | Sealing is cheaper than any insulation and shows up in the load calculation directly |
Table 1. Shares quoted from Natural Resources Canada, Keeping the Heat In, Sections 2, 5, 6 and 7, read September 3, 2026. NRCan gives these as approximate, whole-house figures; your own split depends on the age and construction of the house.
What does Ontario’s code require for insulation?
Ontario’s Building Code sets insulation for new houses through Supplementary Standard SB-12, and for Zone 1, which covers Peel Region, its prescriptive packages call for a nominal R-60 or R-50 ceiling with attic space, R-31 for a ceiling without an attic, R-31 exposed floors, walls of R-19 to R-22 plus continuous insulation, and R-20 continuous insulation on basement walls, paired with a furnace of at least 92 to 94 per cent AFUE. Those are the Table 3.1.1.2.A packages in the SB-12 text amended July 7, 2016, and the 2024 code, in force since January 1, 2025, carries the same attic values into its updated packages. Two things follow for an existing house. First, nobody is required to bring an older home up to these numbers. Second, they are the honest yardstick for how far behind an older envelope is, and NRCan’s own attic worked example starts from an existing ceiling holding only RSI 2.1, which is R-12.
| Component | SB-12 Zone 1, nominal | NRCan retrofit minimum | Reading it for an older house |
|---|---|---|---|
| Ceiling with attic space | R-60 (RSI 10.56) or R-50 (RSI 8.80) by package | Worked example tops up an existing R-12 | The cheapest gap to close, and the one most often already partly done |
| Ceiling without attic | R-31 (RSI 5.46) | Not separately specified | Cathedral and flat roofs; usually a re-roofing job |
| Walls above grade | R-19 to R-22 in the cavity plus R-5 to R-10 continuous | R-15 to R-20 on exterior retrofits, versus R-4 to R-10 existing | About 20 per cent of loss; done when siding or drywall comes off |
| Basement walls | R-20 continuous (RSI 3.52 ci) | “A minimum of RSI 2.1 (R-12) unless local building codes require more” | About 25 per cent of loss; the biggest untouched item in most pre-1990 homes |
| Space heating equipment | 92 to 94 per cent AFUE by package | n/a | The code pairs the envelope and the furnace; so should your quote |
Table 2. SB-12 values read from the Ministry of Municipal Affairs Supplementary Standard SB-12, Chapter 3, Table 3.1.1.2.A, July 7, 2016 amendment, Zone 1 packages A1 to A6. NRCan retrofit figures from Keeping the Heat In, Sections 5, 6 and 7. Read September 3, 2026. Nominal values are the insulation alone; the code also sets effective values for the whole assembly.
What does each insulation material give you per inch?
Each material delivers a fixed amount of resistance per inch, and that number is what turns an R-60 target into a depth you can measure with a tape. NRCan’s Table 3-1 gives the design values below. The practical use is quick: an attic with 6 inches of old loose fill at roughly R-3.6 per inch is sitting near R-22, so the top-up to R-60 is another 10 to 11 inches of the same, or less of a denser product. Check depth at three points, not one, because settled fill is rarely level.
| Material | NRCan design value per inch | Typical use |
|---|---|---|
| Glass fibre batt | R-3.2 (RSI 0.56) | Wall cavities, attic floors between joists |
| Cellulose, blown | R-3.6 (RSI 0.63) | Attic top-ups, the most common Peel Region job |
| Mineral fibre batt | R-3.4 (RSI 0.6) | Walls, basements, where fire resistance matters |
| Expanded polystyrene board, Type II | R-4 (RSI 0.7) | Continuous insulation on basement and exterior walls |
| Extruded polystyrene board | R-5 (RSI 0.88) | Below grade and under slabs |
| Closed-cell spray polyurethane | R-6 (RSI 1.06) | Rim joists, irregular cavities, where depth is limited |
Table 3. Design specification values from Natural Resources Canada, Keeping the Heat In, Section 3.2, Table 3-1, read September 3, 2026. NRCan lists a range for each material; the design value is the one to plan with.
How does insulation change HVAC efficiency and furnace size?
Insulation changes HVAC efficiency and furnace size together, because the size is not chosen from square footage, it is chosen from a heat loss calculation, and insulation is one of that calculation’s inputs. In Canada the calculation is CSA F280, Determining the Required Capacity of Residential Space Heating and Cooling Appliances, which works room by room and adds up conduction through the envelope, air leakage, and ventilation. NRCan’s guidance on cooling equipment says the same thing from the other side: select a capacity “to just meet the design cooling-load calculated.” Improve the attic, the basement and the sealing, and the loss the calculation produces drops, so the capacity it calls for drops with it. That is the whole argument for order. Insulate, then have the calculation run, then buy. Do it backwards and the new equipment is sized to a house that no longer exists.
What oversizing actually costs you
An oversized furnace reaches the thermostat quickly, shuts off, and repeats. Short cycles mean more starts, which is where wear concentrates, and less time at steady output, which is where the efficiency rating is earned. On the cooling side an oversized air conditioner cools the air before it has run long enough to pull the humidity out, so the house reads 22 degrees and still feels damp. Neither problem is fixed by a better brand, and neither shows up in the AFUE or SEER2 number on the box, which is why real HVAC efficiency depends on the house as much as on the label. Both are fixed by sizing to the house as it is after the envelope work, which is why we ask about insulation before we quote equipment, and why our furnace size guide treats its chart as a starting range rather than an answer.
The money side is covered elsewhere so it is only summarised here: the Home Renovation Savings Program currently pays up to $7,700 CAD toward insulation and $600 CAD toward the home energy assessment that produces the numbers, and the assessment is worth doing before either the insulation or the equipment. The full rebate table and the free Home Winterproofing route for income-qualified households are on our lower your heating bill page.
What do Peel Region permits ask for?
The municipalities around Peel Region already treat the heat loss calculation as part of a heating permit, which is the clearest sign that the number is not a sales tool. Mississauga lists “Heat Loss Calculations (if making alterations to ducts)” among the documents for a residential furnace replacement and requires a permit for a “furnace replacement that’s of a higher efficiency than existing”. Brampton’s permit package for changes to heating and ventilation systems asks for “two copies of: Heat Loss and Gain Calculations” and a “Ventilation Design Summary”. Toronto lists “heat loss & heat gain calculations” under mechanical details. If a contractor cannot produce that calculation for your house, they are sizing from memory.
| Municipality | What the permit documents say | Practical effect |
|---|---|---|
| Mississauga | Heat Loss Calculations if ducts are altered; permit for a higher-efficiency furnace replacement | Any duct change with a new furnace brings the calculation with it |
| Brampton | Two copies of Heat Loss and Gain Calculations, plus a Ventilation Design Summary | The calculation is a standing requirement of the HVAC permit package |
| Toronto (Etobicoke) | Heat loss and heat gain calculations under mechanical details; furnace replacement is a listed permit class | Same number, same expectation |
| Caledon, Milton, Halton Hills | Local permit pages not verified for this article | Ask the building department; the provincial code is the same, only the forms differ |
Table 4. Quoted from the City of Mississauga furnace replacement and permit pages, the City of Brampton HVAC permit application package, and the City of Toronto stand-alone mechanical permit page, all read September 3, 2026. Permit rules change; confirm with your municipality before work starts.
Safety: two places insulation must not go
Keep insulation and air sealing clear of the combustion air intake and the venting of any gas furnace or water heater, and never tighten a house around a naturally drafting appliance without having its draft checked. A gas appliance needs the air it was installed with, and sealing that air out risks incomplete combustion and carbon monoxide. In Ontario that check belongs to a TSSA certified gas technician. Second, keep insulation back from recessed light fixtures that are not rated for contact, and off the soffit vents that let the attic breathe; a blocked soffit turns an R-60 attic into a wet one.
Insulate first, or replace the equipment first?
Two questions, and it tells you which job comes first for your house.
STEP 1 OF 2
How would you describe the envelope of the house?
STEP 2 OF 2
And the furnace or air conditioner right now?
.
.
Insulate first. Book the assessment before any equipment quote.
A working furnace in a never-upgraded house is the ideal case for doing things in order. Get the home energy assessment, top up the attic toward R-60 and insulate the basement, which NRCan puts at about a quarter of the loss, then have the heat loss calculation run on the finished house. The equipment you buy afterwards will be smaller and cheaper.
Replace now, but size it to the house you are about to have.
You cannot wait for insulation with no heat in January. Tell the contractor which envelope work is planned and when, and ask for the heat loss calculation to be run on that basis rather than on the house as it stands. If the insulation is realistically months away, a modulating furnace tolerates the change better than a single-stage one. Book the assessment the same week.
Do the basement, then have the load calculated.
With the attic already handled, the basement is the biggest untouched item, and NRCan’s figure of about 25 per cent is why it changes the calculation more than anything else left. Insulate it to at least NRCan’s R-12 minimum, ideally the code’s R-20 continuous, seal the rim joists, then get the CSA F280 calculation run before you look at equipment.
Replace now, and put the basement on the same quote conversation.
Get heat back first. Then, because the attic is done, the one variable left that moves the size is the basement. Ask the contractor to run the heat loss both ways, as the house is and with the basement insulated, and choose the equipment from the second number if the basement work is genuinely booked. A modulating furnace covers the gap between the two.
The envelope is not your problem. Look at the equipment itself.
On a tight house the load is already low, so the remaining gains are in the equipment: its age, whether it was ever sized to the house, and whether it is maintained. A furnace that short cycles in a well-insulated home is probably oversized, and that is a sizing question for the next replacement rather than an insulation job. Keep the annual service and the filter schedule.
Replace it, sized from a fresh CSA F280 calculation, nothing else needed first.
A tight envelope with failed equipment is the simplest case on this page. Insist on a room-by-room heat loss and heat gain calculation on the house as it is, not a square-footage rule of thumb, and expect the result to come in smaller than what was there before if the previous unit was sized by the old rules. The permit package in Mississauga and Brampton will want that calculation anyway.
A routing guide, not a load calculation. The number that decides equipment size comes from a CSA F280 calculation on your actual house.
How we know this
The heat loss shares and material values are quoted from Natural Resources Canada’s Keeping the Heat In guide, Sections 2, 3, 5, 6 and 7, read on September 3, 2026. The code values are read from Table 3.1.1.2.A of Ontario’s Supplementary Standard SB-12, July 7, 2016 amendment; we could not obtain the 2024 edition’s table text directly and have relied on Ontario Building Officials Association guidance that the attic values carry over. The permit wording is quoted from the Mississauga, Brampton and Toronto building permit pages read the same day; Caledon, Milton and Halton Hills were not checked and are marked as such in Table 4. The ordering advice reflects what our installers see on replacement calls in Peel Region. No survey sits behind this page and no savings percentage is claimed, because no Canadian primary source publishes one for insulation alone.
Who runs the calculation when you call
Company and furnace footage from our own channel. None of these is about insulation, so treat them as background on the people doing the sizing rather than as part of the advice above.
Get the size from a calculation, not a guess
When we quote a furnace installation or an air conditioner installation, the size comes from a heat loss and gain calculation on your house, and we will tell you plainly if the envelope work should come first. Free in-home estimates across Peel Region and the west GTA.
Aire One Peel Heating & Cooling, 1625 Courtneypark Dr E, Mississauga, ON L5T 1V9. Serving Mississauga, Brampton, Etobicoke, Milton, Georgetown, Caledon and Bolton.
Frequently asked questions
Does insulation affect HVAC efficiency?
Yes, directly. Heating and cooling equipment is sized to the heat a house loses or gains through its envelope, so insulation sets the load the system has to meet. Natural Resources Canada attributes about 25 per cent of a home’s heat loss to the basement and about 20 per cent to the walls, and a lower load means shorter, easier work for the same equipment.
Should I insulate before replacing my furnace?
If the furnace still works, yes. The new furnace is sized from a heat loss calculation, and insulation is an input to that calculation, so envelope work done first lets you buy a smaller unit. If the furnace has failed, replace it now but ask for the calculation to be run on the house as it will be after the planned insulation.
What R-value does Ontario require for attic insulation?
For new houses in Zone 1, which includes Peel Region, Ontario’s Supplementary Standard SB-12 prescriptive packages call for a nominal R-60 or R-50 in a ceiling with attic space, depending on the package. Existing homes are not required to reach that, but it is the benchmark an older attic is measured against, and Natural Resources Canada’s own worked example starts from an existing R-12.
Can better insulation let me install a smaller furnace or air conditioner?
Yes, and that is the point of doing it first. The CSA F280 calculation that sets equipment capacity adds up conduction through the envelope, air leakage and ventilation, room by room. Lower any of those and the capacity it calls for falls. A furnace sized to the house before the insulation went in will short cycle afterwards.
Where does a house lose the most heat?
Through the basement and the walls, according to Natural Resources Canada, at about 25 per cent and about 20 per cent respectively. NRCan states that basements and uninsulated walls lose more heat than the typical attic. The attic is done first because it is easy to reach, not because it is the biggest loss, and in a leaky house air movement is the main culprit of all.
Do I need a heat loss calculation to replace a furnace in Mississauga or Brampton?
Brampton’s HVAC permit package asks for two copies of heat loss and gain calculations plus a ventilation design summary. Mississauga requires a permit for a higher-efficiency furnace replacement and lists heat loss calculations among the documents when ducts are altered. Either way, the calculation is the right basis for the size, so ask for it whether or not the permit forces it.
Final verdict
HVAC efficiency and insulation are one decision, made in the right order. The house sets the load, the load sets the equipment, and the equipment is only efficient when it was sized to the house it actually heats. For most pre-1990 homes in Peel Region that means the basement and the attic before the furnace, a home energy assessment to produce the numbers, and a CSA F280 calculation on the finished house before any equipment is chosen.
Where we are not the best answer: we install and size equipment, we do not install insulation. If the assessment says your envelope is the problem, an insulation contractor is who you need first, and the honest thing for us to do is size your equipment after they have finished rather than before. We would rather sell you a smaller furnace next year than a larger one now.
Sources and references
- Keeping the Heat In, Section 6: Basement insulation, Natural Resources Canada. The 25 per cent figure and the R-12 minimum. Read September 3, 2026.
- Keeping the Heat In, Section 7: Insulating walls, Natural Resources Canada. The 20 per cent figure and retrofit wall values.
- Keeping the Heat In, Section 5: Roofs and attics, Natural Resources Canada. Attic priority and the R-12 worked example.
- Keeping the Heat In, Section 3: Materials, Natural Resources Canada. Table 3-1 insulation values.
- Keeping the Heat In, Section 2: How your house works, Natural Resources Canada. Conduction, convection and radiation.
- Supplementary Standard SB-12, Chapter 3, July 7, 2016 amendment, Ontario Ministry of Municipal Affairs, as published by the Municipality of Northern Bruce Peninsula. Table 3.1.1.2.A Zone 1 packages.
- Furnace replacement: drawings and documents, City of Mississauga. Read September 3, 2026.
- Permit application requirements, changes to heating and ventilation systems, City of Brampton. Read September 3, 2026.
- Stand-alone mechanical (HVAC) permit, City of Toronto. Read September 3, 2026.
What we updated
September 3, 2026. Rebuilt from a general tip list that named three insulation types and no numbers. Added Natural Resources Canada’s heat loss shares, the SB-12 Zone 1 code values, NRCan’s material table, the sizing argument through CSA F280, what Mississauga, Brampton and Toronto permits ask for, a safety callout on combustion air, and a decision finder. Removed the previous claim that insulation “traps heat inside”, which is not how heat transfer works; insulation slows conduction, it does not trap anything.
Mario Vaghei
General Manager, Aire One Peel Heating & Cooling
Mario pulled the code values on this page from the SB-12 table itself rather than from a supplier’s summary, and kept the 2024 edition’s attic figure flagged as carried over rather than directly verified, because the table text could not be obtained. He runs an HVAC company, not an insulation one, which is why the verdict sends a leaky house to an insulation contractor before it sends them to us.