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What Type of Water Heater Should I Get?

 The fuel source is an important choice, but you should also consider things like efficiency, tank size, long term cost of ownership, as well as the different water heater manufacturers.
Note: This post may contain affiliate links. This means that at no cost to you, we may receive a small commission for made purchases.

To help you make a more informed decision, this short guide will provide the highlights of choosing a water heater that is appropriate for your needs.

Water Heater Types

Because heating your household’s water accounts for almost 20 percent of your annual home’s energy expenses, selecting the right type of water heater is really important when you need to replace or are having a new home built.

Storage Tank Water Heaters


Traditional tank water heaters will have the lowest initial price but because they’re using energy on an almost constant basis, you’ll most likely have higher monthly energy bills than a tankless model.

You’re probably wondering how big of a water heater do I need? The rule of thumb for purchasing the right tank size is to select a tank that provides at least 10 gallons of water per person in the household.

Bear in mind that this number is affected by the length of time spent showering, the temperature setting of the water heater, and other uses of hot water, such as washing dishes or laundry.

The energy rating label on a new water heater will have a “First Hour” rating that should be equal to the number of people in the home multiplied by 10, but a smaller rating works well in homes that practice basic water conservation.

Tankless Water Heaters


There’s good reason why tankless models are so popular these days. Lower monthly energy bills, practically unlimited hot water, and compact size are the main reasons.

The biggest downside is price. Expect to pay around $1,000 for a whole-house electric model to around $3,000 for a gas version (prices include professional installation). Obviously, the size of house plays a factor in price.

Another negative is that if multiple people are needing hot water at the same time, a small tankless model might not be able to keep up. This is often reason enough for some homeowners to install more than one unit in the house. But for overall efficiency, nothing beats a good electric tankless model.

Tankless systems are the most effective way to ensure consistent hot water on demand. They will cost you more up-front for the unit and maybe installation, but because they use energy on demand, you’ll start to recover those costs over time. See “Tankless vs Tank Type Water Heater” for more information.

Point of Use Water Heaters

Point of Use (POU) water heaters, such as the InSinkErator, are basically mini water heaters of making them an excellent choice for a secondary heating system. While they are never the primary water heater in a house, POU water heaters are typically used in under sink situations where more or hotter water is needed at a specific delivery point.

Because they are installed so close to the faucet, you get almost instant hot water since it’s not having to travel through the piping in your walls (where it also cools the farther it goes).

Fuel Source

Electric Water Heaters

Electric water heaters are the most commonly used type, and can be used for tank and tankless systems, as well as acting as a secondary heating source for solar water heaters.

It’s a good idea to understand how an electric water heater works to see if it would be a good option in your home. Energy efficient models tend to be more expensive at purchase and offer a moderate annual cost of operation. Electric water heaters generally have the shortest life expectancy.

Gas Water Heaters


Gas water heaters are almost as popular as electric models. Because there more components, they cost more than comparable electric models but are more efficient in most cases so you have a lower annual cost of operation.

Energy efficient models reduce annual costs even more, but have a higher purchase price up front. All in all, gas tank-type water heaters right now are probably the best value out there and are pretty much standard in new home construction where a natural gas hookup is available.

Hybrid Electric Water Heaters


These types of water heaters are fairly new and offer the latest advancement in electric water heating. By utilizing heat pump technology to pull in heat from ambient air, it is one of the most efficient methods of producing hot water.

Most hybrid water heaters (see also ‘Rheem Hybrid Water Heaters Review And Buying Tips‘) use the exact same connections as a standard electric model. Their downside is the high initial cost, slightly higher maintenance, and the fact that the heat pump will not work properly in temperatures that are too cold.

Solar Water Heaters


While solar water heaters have the highest initial cost, the long term costs are nearly nonexistent. The problem with solar water heaters (Tankless Heaters) is that you will need to have a secondary heating source to provide hot water consistently at night and on cloudy days.

Instead of a traditional tank, solar water heaters using a piping system to keep sufficient water heated, and may not perform well in situations where a storage tank is in use. Solar water heaters are not suitable for all geographic locations.

While a solar water heater system would not be the best choice if you live in the Pacific Northwest, it might make a lot of sense in a state like Arizona.

The Best Water Heater


The type of unit that is best for you will depend on things such as your family size, water usage, and individual needs. Keep in mind that switching from one type to another will involve conversions costs that need to be calculated into the initial expense, a factor that could make it prohibitively expensive to switch to another type.

In many situations, combining tanked and tankless water heating systems will provide you with the most consistent and efficient delivery.

 Check out “Best Water Heaters for Residential Use” to see what specific models we recommend. 


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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