Tankless Water Heater Buying Guide

Water heating accounts for a whopping 18% of your home’s total energy use. Outfitting your home with a tankless water heater is a smart, cost-saving, and energy-efficient way to keep your water hot—and your wallet full.

According to energy.gov, tankless water heaters can be up to 34% more efficient than a conventional storage tank water heater in homes that use 41 gallons or less of hot water, on average, per day. The EPA’s ENERGY STAR® program estimates that the average family can save around $100 a year (or more!) by installing a tankless water heater in the home.

If those figures speak to you, it might be time to look into investing in a tankless water heater for your home.

What Is a Tankless Water Heater?

A tankless water heater (also sometimes called a demand-type water heater) is a freestanding unit that heats your home’s water without requiring a bulky, costly storage tank. This means there's no time spent shivering on cold bathroom tiles waiting for your shower to heat up—tankless water heaters warm your water instantly and with no lag time.

Cold water travels through the tankless heater whenever a tap is activated, where it is quickly and efficiently heated with an electric element, gas burner, or liquid propane (more on that below) and sent on to your faucet.

Another thing to note about tankless water heaters is their life expectancy. It tends to be a lot longer than that of a standard storage water heater: more than 20 years, on average, as compared to 10-15 years!

The Right Size Tankless Water Heater

When choosing the right tankless water heater, there are a few key factors to consider. One of the most important is temperature to flow rate. To put it simply, tankless water heaters are rated on a scale that considers the maximum temperature rise possible (how hot your water can get) at a given flow rate (the number of gallons of water being heated per minute). So, to size a demand water heater, determine the flow rate and the temperature rise you’ll need for its application (whole house or a point-of-use application, such as just a bathroom) in your home.

It sounds like some complicated math, but don’t be intimidated—it’s easier to figure out than it sounds.

Flow Rates (Gallons Per Minute—GPM)

If you’re looking to heat your entire home, you’ll need to compile a list of all the hot water devices you expect to use at any given time. For example, do you think you’ll want to use the shower and dishwasher at the same time? Two showers at once? Once you’ve determined your home’s average use, add up the total of those devices’ flow rates (gallons per minute). This is the desired flow rate you’ll want for the demand water heater.

For example, if you expect to simultaneously run a hot water faucet with a flow rate of 0.75 gallons per minute and a shower head with a flow rate of 2.6 gallons per minute, the flow rate through the demand water heater would need to be at least 3.35 gallons per minute.

The information for your devices’ flow rates is easy enough to find—if you have any questions, just contact the device’s manufacturer. If you’d like to reduce your device’s flow rates, you can install low-flow water fixtures, which can help reduce energy costs if you plan to use many devices at once.

Temperature Rise

To get this figure, deduct the temperature of the incoming ground water (pre-tank) from the temperature you’d like your water to be (set temperature). For most homes, you can estimate that your average incoming temperature is around 50ºF (10ºC). Of course, this depends on the region you live in and what time of year you’ll be heating your water. You’ll want to take these factors into account (for example, if you live in a region that is warm year-round or a region that is hit by particularly cold winters).

For most of your household devices, you'll want your post-tank heated water at about 120ºF (49ºC). Keep in mind: The lower your set temperature, and the higher the incoming water temperature, the more hot water flow your tankless water heater will produce—and vice versa. The more your ground water is required to rise to meet your desired water temperature, the more energy it will take.

It’s important to remember that the flow rates and temperature rise will vary per device, and that you’ll need to account for the different ratios. For reference, here are some average flow rates (GPM) and average desired temperatures for some common household devices:

(Note: Some dishwashers don’t come with their own internal heaters and, in that case, you might want that water heated to 140ºF.)

Types of Tankless Water Heaters

When it comes to upgrading the water heater in your home, there are many options to choose from. The best idea is to make the most informed decision possible and to find the tankless water heater with the specific features that will fit with your household and accommodate how your water system will be used most often.

Whole-House Tankless Water Heaters

Whole-house tankless heaters are the best choice if you’re planning to run multiple devices at one time. Smaller models, like the Takagi T-H3M-OS-N (6.6 GPM), can effectively heat a standard one- or two- bathroom apartment or small family home. Larger models, like the Rinnai RE199iN (9.8 GPM), can heat as many as five plumbing and appliance units at once, without ever running out of hot water.

Point-of-Use Tankless Water Heaters

Unlike whole-house water heaters, point-of-use water heaters are intended to focus on a singular appliance or device, providing steady hot water to just one faucet. These heaters should be installed as close as possible to the desired device and are commonly chosen to heat household faucets like the shower, kitchen sink, or dishwasher.

Since point-of-use heaters are installed directly to the incoming water source, there’s far less lag time (almost none!) for your water to heat up. This makes a big difference when you consider that a standard home water heater is located, on average, 80 feet from the appliance it will heat. That’s a lot more distance for hot water to travel before it arrives at your faucet.

Condensing Tankless Water Heaters

Condensing tankless water heaters are designed to extract and capture heat from the unit’s exhaust, making them very energy efficient. The residual exhaust heat can be used to help produce hot water and, because the exhaust gases are cooler, it is possible to use less expensive venting materials.

Recirculation Water Heaters

Tankless water heaters with a recirculation system are designed to loop any cold water standing in the hot-water line back to the unit. These systems include a pump that pushes water through a dedicated return line to the heater. Recirculation delivers hot water almost instantly, eliminating the waste of running cold water down the drain while you wait for it to heat up.

Other Factors to Consider

Choosing between a whole-house or point-of-use tankless heater can feel like an intimidating decision. And while it really ultimately depends on a variety of factors that are important to your family—cost, efficiency, size of home, desired temperatures—there are some other key considerations.

The Type of Home

Is your house a new construction or an existing build? This is important to note, because it will affect both the ease and cost of installation. If you are seeking to outfit an existing home, it’s likely your best bet will be to choose a whole-house heater. This is because in an existing build, it can be more difficult—and costly—to wire and install separate tankless heaters to individual appliances and devices.

However, if your home is a new construction, you have more freedom to direct points of installation. If this is the case, it might make more sense to install point-of-use tankless water heaters exactly where you’ll need them most. For a new construction, you might opt to install multiple point-of-use water heaters for different faucets.

It’s worth noting that, while the upfront cost of purchasing and installing multiple point-of-use heaters is higher than a single whole-house heater, over time individual units will actually use less energy than a single unit—thereby lowering your bills in the long run.

But that’s not to say a whole-house unit couldn’t be the most energy- and cost-efficient choice for your particular home. Remember that, ultimately, this is largely determined by the flow-to-temperature-rise ratio. That ratio is also affected by the type of build of your home and the number of appliances you need to heat.

How Often the Water Heater Will Be Used

Another factor to consider when choosing between a whole-house or point-of-use water heater is just how often you’ll be using an appliance or device. For example, if you need to heat water for an infrequently used guest bathroom or a whirlpool tub, it probably makes sense to use a point-of-use unit. However, for outlets used daily, like the kitchen sink and primary bathroom, perhaps a whole-house heater is the more prudent choice.

Frequency is also determined by how many people are home, and how often. If you have a large family or busy household, with family members often home during the day using a variety of appliances, your best bet is likely to opt for a whole-house tankless water heater. However, if you’re a single person who spends a lot of time outside the home or travels a lot, point-of-use heaters will probably be better suited.

Fuel Types

There are a few main sources of fuel for your tankless water heater, whether you choose a whole-house or point-of-use heater. Most tankless heaters are powered by natural gas, liquid propane, or electricity.

Tankless Water Heaters Powered by Natural Gas or Liquid Propane

Natural gas and liquid propane heaters operate similarly, and both tend to be more efficient and heat water more quickly than an electric tankless water heater. Gas and propane are less costly than electric power.

A gas-powered tankless heater often makes the most sense if you are fueling a whole house, since it only requires the installation of a single gas line. It becomes a bit more complicated if you choose a few point-of-use heaters, because you’ll then need to supply gas to multiple locations, which becomes more labor intensive and costly. Gas heaters can produce a larger temperature rise per GPM than most electric heaters (around five gallons per minute as opposed to two).

Gas or propane heaters often require special types of ventilation, so these tend to be the best choices to consider when you’re outfitting a new build home or a remodel. Keep in mind that not all areas have municipal gas service available and propane fuel must be kept in a storage tank on your property.

Electric Tankless Water Heaters

While gas water heaters can be more efficient in the long-term, electric tankless water heaters tend to be easier and less costly to install. Electric units are typically smaller than their gas counterparts and don’t require ventilation (if your home isn’t already outfitted with the proper ventilation for a gas heater, that will increase the cost and hassle of installation). For these reasons, electric heaters allow for more flexibility in terms of where they can be installed—in smaller, more out-of-reach places than a gas tankless heater, and often closer to the desired appliance.

Electric tankless water heaters tend to be a better option when you’re outfitting a pre-existing build and don’t want to incur a lot of extra construction or installation time and costs, in terms of making sure that you have the proper ventilation and gas lines.

Indoor vs. Outdoor Units

A final matter to consider is whether your needs are best met by choosing an indoor or outdoor tankless water heater. An indoor heater is installed inside the home and an outdoor heater is installed outside. But what are the benefits and complications of each?

Indoor Tankless Water Heaters

An indoor tankless water heater isn’t subject to changing weather conditions and elements, which is one benefit. However, condensation will gather on and around your heater, and an indoor installation requires venting attached to a drain to pull this condensation away from the heater so it doesn’t damage the unit or your home. Indoor heaters also require ventilation piping (to direct air flow), which can be installed either vertically or horizontally.

Outdoor Tankless Water Heaters

An outdoor tankless water heater requires no added ventilation piping, as it will ventilate itself via natural air flow. Outdoor water heaters are built to withstand damaging natural elements like snow, rain and wind. However, an outdoor tankless water heater does require attention and maintenance. For example, you’ll need to remember to drain the unit when temperatures dip very low, to avoid water freezing in the tank.

Whether your home is a new construction or an existing build will also help to determine whether you should choose an indoor or outdoor heater. Outdoor tankless water heaters tend to be a better choice for existing homes, as they require fewer changes to existing plumbing and ventilation. An indoor heater might make more sense for a new build or remodel, as you can construct your home around the heater, rather than fit your heater into your existing home, which can be both more time consuming and financially costly.

Ready to Take the Next Step?

Quicker responsiveness, on-demand hot water, and energy efficiency all in one—tankless water heaters are a valuable upgrade to your home. The real question is finding the right one.

In the end, a variety of factors come into play when determining what type of tankless water heater makes the most sense for your home and family. Remember these key points when making your decision:

• Type of construction (new/remodel or existing build)
• Weather and climate of the region in which you live
• Household habits/lifestyle
• Number of appliances you need to heat
• How often you’ll use each of these appliances
• Importance of cost vs. efficiency vs. maintenance for your family