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Tankless Water Heater Buying Guide

Note: This post may contain affiliate links. This means that at no cost to you, we may receive a small commission for made purchases.

At the time, and until recent decades, nothing changed much in water heater history. But today’s tankless water heater makes Ruud’s invention seem hopelessly bulky and inefficient. Let’s take a look at how the tankless water heater has revolutionized the simple act of taking a hot bath.

SEE ALSO:  Water Heater Buying Guide – Tank Type

Undeniable Tankless Water Heater Benefits

Never Run Out of Hot Water

Probably the biggest disadvantage of traditional tank models is that you’re limited by the amount of hot water the tank will hold. While it may not be a problem if only one or two people live at home, it becomes a common problem for families.

Sure you can get a larger tank but the price goes up exponentially once you go past the standard 50-60 gallon models. With a tankless model, you can have multiple people take consecutive showers and still have hot water to fill up a large soaking tub while running the dishwasher or washing machine (see also ‘How to Fix a Washer Machine Drain Backing Up?‘).

Save Money

Hot water is hot water but it does make a difference in the ultimate price you pay in energy bills which type of hot water heater you choose. Tankless water heaters, while costing more upfront, allow some homeowners to realize as much as a 40 percent savings on the heating cost, as compared to a traditional storage unit.

Save Space

You also need less physical space to install a tankless water heater (see also ‘ Tankless Water Heater Installation Cost ‘). With a size that resembles a small suitcase, you can mount one on the wall, in a crawl space, or even under a sink. Tankless water heaters for RVs are becoming increasingly popular specifically for this. These benefits alone should give you pause to at least consider upgrading to this technology next time you’re in the market for a water heater.

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How Does a Tankless Water Heater Work?

A tankless water heater is designed to heat water so incredibly fast that you don’t need a storage tank. Once demand is applied, say from someone turning on a shower head, it’s only then that water starts to flow through the unit.

Some models provide a small reservoir tank so you have hot water for the few seconds it takes to heat incoming water on the fly. Cold water comes in from the house’s plumbing, where an igniter fires up a flame that heats the water as it passes through copper tubing.

In less time than you would expect, hot water flows out ready to use just as if it came from a storage type heater.

Related: How to Flush a Tankless Water Heater

What Size of Tankless Water Heater Do You Need?

The critical number to consider with a tankless heater is temperature and flow rate. To see how much you’d need, you need to calculate how many appliances in your home need hot water and how much demand would be put on the system at max capacity.

Here are some sample appliances with associated flow rates expressed in gallons per minute (GPM) and the normal temperature desired (source):

ApplianceGPM (gallons per minute)Temperature
Tub4.0102° F
Shower2.5104° F
Washing Machine2.0120° F
Dishwasher1.5110° F
Kitchen Sink1.5110° F
If you think you might have a shower, washing machine, and kitchen sink going at the same time, you’ll need a unit that can supply 6 GPM (2.5 + 2.0 + 1.5 = 6.0 GPM). Additionally it needs to be able to raise the water temperature from an average of 40 degrees up to 120 degrees for the washing machine – a rise of 80 degrees.

When shopping for a tankless heater, refine your search to those that provide an adequate temperature rise and flow for your needs.

Related: Best RV Tankless Water Heaters

What Types of Tankless Water Heaters Are Out There?

Tankless hot water heaters come in three different types: non-condensing, condensing, non-condensing hybrid.

Non-condensing and condensing were the first two generations of tankless heaters that have been used in Europe for decades. The non-condensing design uses a primary heat exchanger to heat water, which creates hot exhaust and the necessity to install an expensive vent. A condensing unit employs a second heat exchanger which uses exhaust from the first to further heat the water – a much more efficient design.

Related: Condensing vs Non-Condensing Tankless Water Heater (Comparison)

The hybrid model was created in the United States. By adding a small holding tank that overcomes the inefficiency of short draws, this model is able to develop a true efficiency rating close to .96 (1.00 is perfect).

For those that understand the benefits of a hot water recirculating system, a few tankless models now include an on-board recirculating pump such as the Rinnai RUR98iN (my favorite) and Navien NPE-240-A.

How Much Does a Tankless Water Heater Cost?

As with almost anything you buy, tankless water heaters run the gamut in price from under $500 to over $3,000. Some people may not care how much this type of heater actually saves over a storage model, but are only interested in the smaller footprint and “coolness” factor.

According to the U.S. Department of Energy, a gas-fired tankless water heater will save you about $108 yearly, while an electric model about $44. You can expect the unit to last 20 years with normal maintenance. With a new storage water heater costing in the vicinity of $400-$600, you have some math to do before you make a decision.

Also, tankless models tend to have much fewer issues (leaking, making noise, etc.) overall compared to their tank counterparts so there are less maintenance/repair costs as well as a lower chance of water damage due to leaking.

How Much Does it Cost to Install a Tankless Water Heater?

If your house is already set up for tankless technology, installation costs might not be too bad and in the vicinity of $700-$1,000 (according to Homewyse), but a complete installation could cost $2,000 or more in addition to the cost of the heater. Proper installation requires the following:

  1. Dedicated gas line to handle the 200,000 BTU demand
  2. Category-3 venting; might require unit relocation to exterior wall or outdoors
  3. Additional piping if relocated
  4. Dedicated power supply with battery backup
  5. Water heater permit
  6. Following all code requirements

unlimited-hot-waterAs you can see, installing a tankless water heater is no small feat. If you are planning on a new construction home, it’s usually highly recommended to go with a tankless system if you are even considering it and your budget allows. This is the best time to do so.

The bottom line is that, despite its undeniable efficiency and longer life, the increased cost of installing a tankless water heater might not make it financially feasible right now.

Tankless models can cost up to three times as much as a storage type. You can get a low-end 50-gallon tank water heater for around $500 but a top-of-the-line Rinnai or Navien may cost around $1,500.

Future energy savings might not make it a wise financial decision in the present time. Having said that, not all decisions have to be made strictly according to dollars and sense.

As with other new technology, prices of tankless water heaters can be expected to decline as time goes on, aided by deeper market penetration, and more widespread manufacturing.

There’s no denying these little units have an aesthetic appeal that storage water heaters could never match. In addition, the efficiency requires less use of open flame and is probably environmentally friendlier to some extent.

The bottom line is you just have to decide for yourself what kind of heater you want. There’s no wrong answer.

author avatar
Anthony Barnes
Anthony Barnes is the founder of Water Heater Hub and a second-generation plumber by profession. Before developing Water Heater Hub, Anthony Barnes was a full-time plumber, and he has undertaken a wide variety of projects over the decades. As a second-generation plumber, it was easy for Anthony to get used to the technicalities of all from a tender age


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