Introduction
Tankless water heaters provide hot water on demand and can save energy compared with traditional tanks.
The guide walks through key pros and cons and how to choose the right size, venting, and cost considerations for your home.
You’ll learn practical steps to compare models, estimate performance, and plan a safe, effective installation.
Key takeaways
- Consider gas vs electric models based on supply, venting, and climate.
- Determine peak simultaneous hot water needs to avoid undersizing or oversizing.
- Check installation space, venting requirements, and permit rules before purchasing.
- Expect higher upfront costs but potential energy savings with proper sizing.
- Plan for professional installation and regular maintenance to ensure efficiency.
- Review warranty terms and local contractor qualifications for service and response times.
Table of Contents
- Introduction
- Key takeaways
- What is a tankless (on-demand) water heater?
- How tankless water heaters work
- Advantages of tankless water heaters
- Disadvantages and limitations
- Costs: purchase, installation, and lifecycle analysis
- How to choose the right tankless water heater for your home
- Installation, maintenance, safety, and common mistakes to avoid
- Warranty, after-sales support, and choosing a contractor
- Conclusion
- FAQ
What is a tankless (on-demand) water heater?
A tankless water heater heats water on demand, with no storage tank. This is different from traditional tank heaters that keep a reservoir hot for later use. The capacity is described as flow rate in gallons per minute (GPM) and depends on heat source and temperature rise.
They can serve the whole house or just near hot-water fixtures. Sizing hinges on how many fixtures run at once and the climate, plus the unit’s GPM rating at a given temperature rise. They sit in the plumbing where hot water begins, with considerations for venting or electrical supply and space.
Tankless vs. traditional storage heaters
A tankless water heater is like a high-speed coffee maker: it heats up water on demand, without storing hot water in a big tank. This means no wasted energy keeping gallons of water warm when you’re not using it.
Traditional storage heaters are more like a giant thermos—holding lots of preheated water ready to go at any time. They take up more space but offer constant hot water without the need for complex sizing calculations.
Tankless units shine in homes with high demand or limited space, especially when you want endless hot water for showers and appliances without running out. But they require careful sizing based on your peak usage to avoid cold water issues.
Common terminology and specs to know
When shopping, you’ll see terms like GPM (gallons per minute), which tells how much hot water the heater can produce at a given temperature rise. Higher GPM means more flow without losing heat.
The recovery rate shows how fast the unit heats up cold water to your desired temp, crucial for big households or multiple fixtures running simultaneously.
Energy factor (EF) and energy efficiency ratio (EER) are like miles per gallon ratings; they tell you how efficiently the heater uses fuel. Higher numbers mean less waste and lower bills.
The first-hour delivery spec is key for whole-house units, showing how much hot water can be produced in an hour under peak demand conditions. It’s vital to match your home’s needs accurately.
How tankless water heaters work
Tankless units heat water on demand rather than storing it. Cold water enters, a flow sensor activates the heater, and it passes through a heat exchanger where heat is added. The hot water then goes to fixtures, and the flow rate versus temperature rise determines how hot it gets; electric units use coils and electronics, while gas units use a burner and vented heat exchanger.
For a DIY homeowner, plan for venting if gas, or a suitable electrical service for electric units. Gas units need proper venting, a burner setup, and combustion air; electric units need adequate circuit capacity and correct wiring. Check the label or datasheet for flow and temperature specs, and remember performance depends on your water pressure and incoming temperature.
Electric tankless operation
The electric tankless water heater works by heating cold water as it passes through a series of electrical resistance elements, often called heat coils. These elements are similar to the ones in your kettle or toaster but designed for continuous use and high flow rates. When you turn on a hot water tap, the flow sensor detects the incoming cold water and activates the electric heater.
Electric tankless units typically require a dedicated circuit with sufficient amperage to handle the heating elements’ power draw. For example, a 240-volt unit might need at least a 30-amp breaker. The higher the flow rate you want to support, the more powerful and costly your electrical service needs to be.
One key limitation of electric tankless heaters is their relatively low maximum flow rates compared to gas units. This means they’re best suited for smaller homes or point-of-use applications where demand isn’t too high. Electric models also tend to have slower recovery times, meaning the water takes longer to heat up when you first turn it on.
Gas (natural gas/propane) tankless operation
A gas tankless heater uses a burner to heat the water as it passes through. The burner is fueled by either natural gas or propane, depending on your setup. When you turn on a hot water tap, the flow sensor activates the burner and adjusts its flame based on how much cold water is flowing in.
Gas units need proper venting to safely exhaust combustion gases. This typically means running a direct vent pipe from the heater to the outside. The vent can be either through a wall or roof, depending on your home’s layout and local building codes. Proper ventilation ensures that the unit operates efficiently without safety risks.
Gas tankless heaters are generally better suited for higher flow rates and colder inlet water temperatures compared to electric units. They can handle multiple fixtures operating simultaneously and provide hot water more quickly due to their higher heating capacity. However, they also require regular maintenance like cleaning burners and checking venting systems to ensure optimal performance.
Advantages of tankless water heaters
Tankless water heaters heat water on demand instead of storing hot water in a tank. They tend to offer better efficiency, continuous hot water, space savings, longer life, and potential environmental benefits. The exact savings depend on climate, fuel type, incoming water temperature, and how you use hot water.
Think about how many fixtures you’ll run at once and how temperature rise affects performance; flow-rate matters and buffer or hybrid options may be worth it in some setups. Installation and venting, size, and maintenance influence cost, payback, and long-term reliability, so check the label and installer guidance for your home. For a DIY plan, determine your peak GPM, verify readiness, and compare warranties and service options to gauge true ROI.
Energy efficiency and operating cost savings
Tankless water heaters are designed to be highly efficient, especially for homes with low-to-moderate daily hot water use. They heat water only when you need it, cutting down on standby losses that storage tanks experience.
The energy factor (EF) and uniform energy factor (UEF) ratings tell you how much of the input energy is converted to useful output. Higher EF means better efficiency. For instance, a tankless heater with an EF around 0.9 might save you $150-$300 annually compared to a traditional storage heater.
However, savings can vary based on climate and incoming water temperature. In colder climates where the water starts off cold, your heater works harder and uses more energy. Also, if you have high hot water demand or multiple units running simultaneously, efficiency drops and costs rise.
Maintaining your tankless heater through regular cleaning and filter changes can help keep it operating at peak efficiency, maximizing savings over its lifespan.
Longevity, warranty, and environmental benefits
Tankless water heaters generally have a longer lifespan than traditional storage tanks. They can last up to 20 years with proper care, compared to around 10-15 years for storage units.
The warranties on tankless models typically cover parts and labor for 6-12 years, which is longer than the standard warranty on a storage heater. This extended coverage reflects their durability and reliability.
Environmentally speaking, tankless heaters reduce standby losses since they don’t keep water heated when it’s not in use. They also produce fewer emissions over their lifespan compared to constantly heating up a large volume of water like a traditional tank does.
To get the most out of your investment and ensure you’re covered for maintenance and repairs, always check the warranty details before buying. Look for reputable brands with strong service networks in your area.
Disadvantages and limitations
This option generally costs more upfront than a traditional storage tank, but the long-term ownership picture depends on energy use and efficiency. Installation tends to be more complex, with venting, fuel or electrical supply, permits, and possibly a dedicated space to fit. Expect limits on how many gallons per minute you can get at different outlet temperatures, which affects typical household use.
In cold climates, incoming water temp matters a lot, and performance can drop if you don’t choose a model built for your region. Retrofitting older homes often means chasing existing piping, matching controls with current systems, and checking that everything complies with local rules. Always read the label or datasheet and follow manufacturer instructions for clear guidance on setup, limitations, and what to upgrade if needed.
Installation and retrofit challenges
Tankless water heaters come with unique installation requirements that can be a challenge, especially for older homes. Venting is one of the biggest issues; gas models need proper venting to remove exhaust gases safely. This often means running new vents through walls or roofs, which can be costly and disruptive.
For electric tankless units, you might need to upgrade your electrical service if it doesn’t meet the high power demands. Gas lines also may require upgrades for sufficient gas supply. In older homes with existing plumbing systems, integrating a tankless heater could mean replacing old pipes or adding new ones to accommodate the unit’s location.
Water treatment is another consideration. Hard water can cause buildup inside the heater, reducing efficiency and lifespan. Installing a water softener before the tankless system might be necessary to prevent this issue. Retrofitting an existing home with these requirements can add significant costs and complications.
Performance limits and user experience
Tankless water heaters have a limit on how much hot water they can produce at once, measured in gallons per minute (GPM). This means if you turn on multiple fixtures simultaneously, the temperature and flow rate might drop. For example, running your shower while doing dishes could result in lukewarm water.
Each tankless unit has a specific GPM rating based on incoming water temperature. In cold climates, this can be particularly limiting since colder water requires more heating to reach hot temperatures. If you live in an area with very low winter temps, your heater might struggle to keep up with demand.
To overcome these limitations, consider installing point-of-use (POU) units near specific fixtures like showers or kitchen sinks. Alternatively, multiple tankless heaters can be installed to cover different areas of the home. This setup ensures consistent hot water delivery even during peak usage times.
Costs: purchase, installation, and lifecycle analysis
Costs cover more than the sticker price. Think total cost of ownership: upfront purchase, installation labor, and any ancillary hardware like venting, filtration, or valves that influence the bottom line, plus ongoing operating and maintenance expenses.
Understanding installation drivers and maintenance helps you decide if a tankless setup makes sense for your home. It matters because fuel type, plumbing and vent tweaks, electrical service, and local permitting can shift costs, while ongoing energy use and service needs affect your payback over time.
Upfront and installation cost drivers
The upfront costs for a tankless water heater include the unit itself, which can range from $1,000 to over $2,500 depending on its size and efficiency. For gas models, you’ll need to factor in venting requirements, which might mean running new pipes or modifying existing ones—this adds another few hundred dollars.
Electric tankless heaters often require an electrical service upgrade if your current setup can’t handle the load. This could cost anywhere from $500 to $2,000 depending on how much work needs doing. Labor costs are significant too; expect to pay a plumber around $1,500-$3,000 for installation.
Don’t forget about permits and inspections, which can add another few hundred dollars to your budget. Plus, you might need additional hardware like filters or valves that aren’t included in the base price of the heater—these extras can push costs up by a couple hundred more.
Running costs, maintenance, and return on investment
Tankless heaters are designed to save you money in the long run thanks to their high efficiency. However, they do require regular maintenance such as descaling every few years and filter changes annually—these can add up over time but are necessary for optimal performance.
The biggest factor affecting your running costs is local energy prices. If electricity or gas rates are low where you live, the payback period will be shorter. For example, if you save $100 a month on heating bills and spend around $25 annually on maintenance, it could take just 8-10 years to break even.
To estimate your return on investment, start by calculating how much hot water your household uses daily and compare that with the energy savings from switching to tankless. Use this simple formula: divide your annual energy cost savings by the initial installation costs to get an idea of when you’ll see a financial benefit.
How to choose the right tankless water heater for your home
The right tankless setup starts with a clear plan: map your hot-water use, estimate the needed GPM, compare fuel options, and decide between whole-home versus point-of-use units. You’ll want a simple worksheet to track daily hot-water events and identify the times you spike. Then, run through a step-by-step approach to size demand and confirm the best fuel path and installation scope before you buy or change anything.
This matters because wrong sizing or the wrong configuration will waste money and leave you with cold showers. Expect practical checks during planning—space for mounting, ventilation, and how your electrical or gas setup can handle a unit or two. Use the label and manufacturer instructions to guide choices, and remember: future changes like renovations or new occupants affect sizing and compatibility. A thoughtful plan saves time, avoids surprises, and keeps maintenance and warranty considerations in check as you move from decision to install.
Step-by-Step Process
This sequence helps you methodically choose the right tankless water heater, ensuring all bases are covered before installation.
- Assess your home’s hot water needs by mapping out daily usage patterns. Note peak demand times and high-use fixtures.
- Calculate the required GPM based on fixture flow rates and incoming water temperature. Adjust for climate and future changes.
- Compare fuel sources (electric, natural gas, propane) considering efficiency ratings, installation complexity, venting needs, and operating costs.
- Determine whether a whole-home or point-of-use system is best suited to your home’s layout and hot water demand patterns. Consider hybrid approaches if needed.
- Check local building codes and ensure compatibility with current plumbing and electrical/gas setups. Verify space availability for mounting and ventilation requirements.
Sizing and matching to household demand
To size your tankless water heater correctly, start by adding up the GPM (gallons per minute) of all fixtures that will use hot water simultaneously. This includes showers, faucets, dishwashers, and washing machines.
Next, adjust for the incoming groundwater temperature in your area. Cold water entering at lower temperatures requires more heating power to reach a comfortable hot-water level. Use this adjusted GPM number when selecting your tankless heater model.
Your chosen unit must have enough peak flow capacity to handle simultaneous use without dropping pressure or losing heat efficiency. This ensures consistent performance during high-demand periods.
Fuel choice, location, and venting considerations
Selecting between electric and gas (natural gas or propane) depends on your home’s existing infrastructure and efficiency goals. Electric units are simpler to install but can be less efficient in colder climates due to higher resistance heating.
For gas models, ensure proper ventilation is available for exhaust gases. Indoor installations require dedicated vent pipes; outdoor setups might need weatherproof enclosures. Check local building codes for specific requirements on venting and mounting locations.
If your home lacks the necessary electrical or gas capacity, you may need to upgrade utility lines before installation can proceed. This adds upfront costs but ensures long-term reliability of your tankless system.
Installation, maintenance, safety, and common mistakes to avoid
Professional installation is strongly recommended because it helps ensure proper venting, correct sizing, and adherence to warranty expectations, which can prevent costly issues down the line. From the outset, consider site suitability (indoor vs outdoor), power or gas supply requirements, venting paths, clearance, and insulation or space constraints, and verify the manufacturer instructions before you start any work. If anything doesn’t line up with what the label or datasheet says, stop and check with the installer or manufacturer before proceeding, and document what you find for reference.
Routine maintenance and safety checks matter because they protect you from leaks, poor exhaust, and unexpected shutdowns, which can be hard to diagnose after the fact. Expect to perform annual inspections, descaling or flushing in hard-water areas, filter and coalescing checks, and thermostat or flow verification, while always confirming vent integrity, combustion air adequacy, a functional pressure-relief valve, and accessible shutoff valves; if you’re uncertain about any step, consult product instructions or label guidance and avoid cutting corners. Common buyer and installer mistakes—like incorrect venting or sizing, bypassing the T&P valve, improper gas connections, undersized electrical service, or neglecting seasonal drain-down—tend to trip the system up and create real safety risks, so double-check those points against the manufacturer instructions and local rules.
Maintenance checklist and schedule
Follow this maintenance checklist annually to ensure your tankless water heater runs smoothly and efficiently.
- Descaling/flushing: Once a year, especially in hard-water areas. Check manufacturer’s guidelines for frequency. Skipping can lead to mineral buildup and reduced efficiency.
- Filter/coalescing checks: Twice yearly if filters are used. Replace or clean as needed. Neglecting this can cause poor water quality.
- Venting integrity: Inspect annually, looking for cracks or blockages. Proper venting is crucial to prevent carbon monoxide buildup.
- Gas connections: Check for leaks and proper fit every six months. Use soapy water to detect gas leaks; skipping this can be dangerous.
- Electrical/GFCI requirements: Verify annually that all electrical connections are secure and GFCIs are functioning properly. Faulty wiring poses a fire risk.
- Pressure/temperature relief valve: Test monthly to ensure it’s working correctly. A malfunctioning T&P valve can cause serious damage or injury.
- Thermostat calibration: Adjust and verify annually for accurate temperature settings. Improper calibration wastes energy and may lead to scalding.
- Piping connections: Inspect all connections quarterly for leaks, corrosion, or wear. Loose fittings can cause water damage.
Quick rule: Regular maintenance prevents costly repairs and ensures safety.
Safety, codes, and permits
Before installing a tankless water heater, check local building codes for venting requirements. Ensure proper clearance from walls and combustibles to prevent fires.
Verify that your home has the necessary electrical service or gas supply capacity. Improper sizing can lead to system failure or safety hazards. Consult with a licensed contractor if unsure.
Obtain any required permits from local authorities before starting installation. Skipping this step could void warranties and result in legal issues down the road.
Warranty, after-sales support, and choosing a contractor
Warranties split into three core parts: heat exchanger, other parts, and labor, with each covering different failure scenarios and durations. You’ll want to compare how long each component is protected, whether coverage transfers if you sell the home, and what maintenance or installation conditions could affect eligibility. Read the fine print on installation requirements, maintenance steps, and any exclusions; if a claim hinges on a single checkbox, that’s a red flag you should flag before committing to a contractor.
This matters because it shapes your total cost of ownership and who actually handles repairs, whether on-site or remote troubleshooting, and how quickly service is available. Expect guidance on maintenance schedules, approved parts, and how neglect or improper use can void coverage, plus practical details like registration steps and required documentation. When talking to installers, ask about their experience with tankless models, warranty handling if the unit fails, and what they provide in writing for your records (warranty registrations, receipts, model and serial numbers) to support a clear, auditable path to coverage.
What to check in a warranty and fine print
Before you sign on the dotted line, make sure you know what your tankless water heater’s warranty covers.
- Heat exchanger coverage: Check how long it lasts. This is usually the longest part of the warranty.
If skipped: You’ll face high repair costs if it fails early. - Parts and labor: Look for separate durations and limits on both. Parts often cover less time than labor.
If skipped: You might end up paying for parts but not labor, or vice versa. - Maintenance requirements: Know what upkeep is needed to keep the warranty valid.
If skipped: Neglecting maintenance can void your warranty. - Transferability: Can you transfer it if you sell your home?
If skipped: You might lose coverage when selling, leaving buyers unhappy. - Registration steps: Confirm how to register the unit for full coverage.
If skipped: Missing this step can nullify warranty benefits. - Installation conditions: What must be done correctly to avoid voiding the warranty?
If skipped: Improper installation can lead to premature failure and no coverage. - Exclusions: Read what’s not covered, like wear-and-tear parts.
If skipped: You’ll face unexpected costs for repairs that aren’t covered.
Quick rule: Always read the fine print to avoid surprises down the road.
Vetting installers and comparing offers
Choosing the right contractor is key. Look for someone certified by the manufacturer, with local licensing and references from past jobs.
Ask about their experience with tankless models, service capabilities, and how they handle warranties if something goes wrong. Get written estimates that clearly outline scope of work and any additional costs beyond initial installation.
Compare offers based on contractor credentials, customer reviews, warranty coverage, and overall value for your budget. Don’t just go for the lowest price; quality and reliability matter more in the long run.
Conclusion
A tankless system is a compact, durable way to get hot water, but the payoff comes from careful sizing, proper installation, and solid safety checks. Do it right and you improve reliability, save space, and protect your home from leaks or damage.
First, confirm your fuel type and venting needs, then size the unit for your demand and home layout; check electrical or gas supply, venting or condensate requirements, and the installation clearances before you start. Then pick a model with the right flow rate for your family, ensure you have the correct wiring or gas line capacity, install per code, add proper filtration and a pressure relief arrangement, set a sensible temperature limit, and test thoroughly for leaks and proper operation.
Common mistakes to avoid are installing an undersized unit, skipping proper venting or combustion air, bypassing permits or code requirements, and neglecting maintenance like descaling and filter changes; always follow safety rules—never work on live gas or electrical connections without shutting power and gas off, always use approved fittings, and test for leaks with the system depressurized before turning it on. If you’re unsure about venting, gas or electrical work, or permits, call a pro and get a code-compliant install; otherwise you can complete the basic setup, run a careful first test, and schedule a follow-up check.
If you handle the basics, you’ll avoid damaging your home and wasting energy. When in doubt about system sizing, venting, or code compliance, bring in a contractor sooner rather than later. Stay focused on safe operation, then enjoy reliable hot water with less hassle.
FAQ
How does a tankless water heater save energy?
It heats water on demand. No tank means less standby heat loss and lower energy use when you’re not running hot water.
Will a tankless unit run forever without problems?
No. It needs proper sizing, good venting, and regular maintenance. If you nick the installation or skip service, it will disappoint you fast.
What should I check before buying one?
Match the heater to your peak flow. Check gas supply or electrical capacity and venting needs. Make sure you have solid installation clearances and a qualified pro for connections.
Is it worth replacing an old tank with a tankless unit?
Usually yes if you want endless hot water and smaller space. Weigh the upfront cost against long-term savings and the installation complexity.