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.

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.

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.

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.

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.

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.

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.

Insulate first, or replace the equipment first?

Two questions, and it tells you which job comes first for your house.

A routing guide, not a load calculation. The number that decides equipment size comes from a CSA F280 calculation on your actual house.

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.

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.