Social Development Minister Madeleine Dube says the new facility will have 90 beds.
Dube says the decision was made to replace the existing home after damage was discovered during an assessment before planned repair work.
She says the damage was caused by improper ventilation and water infiltration.
The government says until the new home is built, it will spend a further $2.1 million to repair the damage in order to allow the existing facility to continue operations.
That work will include replacing windows, walls, fixtures and pipes as well as wiring and installing an emergency backup generator.