Tankless Water Heater Buying Guide

Published February 6,

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In recent years, tankless water heaters have become a popular alternative to traditional models. Also called on-demand or spontaneous water heaters, tankless designs heat water only when needed. They can reduce energy consumption and take up less storage space than water heaters with large tanks.

This guide explores how to choose between the different types to find the best tankless water heater for your home.

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Table of Contents

1. Benefits of Tankless Water Heaters

2. Choosing the Right Tankless Water Heater

3. Tankless Water Heater Installation and Maintenance

4. Gas vs. Electric Tankless Water Heaters

5. Non-Condensing vs. Condensing Tankless Water Heaters

6. Point-of-Use Tankless Water Heaters

Benefits of Tankless Water Heaters

Compared to those with tanks, tankless water heaters provide a wide array of valuable benefits. Tankless water heater advantages include:

• Energy efficiency – A key difference between tank and tankless units is the heating method. Tank heaters hold a set amount of hot water in their tanks that is constantly reheated to maintain temperature. But tankless models only heat water when necessary, reducing energy usage. The U.S. Department of Energy has found that tankless heaters are 24-34 percent more energy efficient than tank heaters.
• Hot water supply – With a steady water supply, tankless units can provide continuous hot water, even during peak usage times. But tanks can run out of hot water, especially if multiple people use them simultaneously.
• Space requirements – Generally, tankless water heater sizes are smaller. They can also be mounted on a wall, which is useful for apartments.
• Product durability and lifespan – If properly maintained, tankless water heaters can typically last up to 20 years or more, decreasing waste. Tankless models also don’t rupture or leak, reducing water damage risks.
• Environmentally friendly – With their advanced technology, tankless water heaters tend to consume less energy overall. These units reduce homes' greenhouse gas emissions and produce a smaller carbon footprint. They also promote water conservation, reducing waste and increasing sustainability. And they last longer, decreasing the environmental impact related to their manufacturing and disposal.
• Utility savings – The U.S. Department of Energy estimates that tankless water heaters can provide energy savings of up to 50 percent. Homeowners may qualify for significant rebates and incentives from government agencies and utility companies. These models may also boost your home’s value.

Note: Check with your local utility company or government websites to see if tankless water heater rebates are available in your area.

Choosing the Right Tankless Water Heater

When it comes to tankless water heaters, the most important thing is determining your home’s water usage. But you’ll also need to account for the incoming water’s temperature. And you need to calculate how much heat the unit must add. The following factors will help you to select a tankless model.

Water temperature – To identify how much incoming water must be heated, subtract the incoming water temperature from your desired temperature. For instance, to heat 60-degree Fahrenheit (F) water to 120 degrees, you'll need a heater that can add 60 degrees F. Ideally, you’ll need one that provides the needed combination flow rate and minimum temperature rise.

Flow rate - You must calculate the flow rate, which is the gallons per minute (GPM). This shows how much hot water is needed for appliances running at the same time.

• The flow rate should be at least 3.25 gallons (12.3 liters) per minute. Generally, a shower uses 1-2 GPM, while a dishwasher uses 1-2.5 GPM.
• To determine rising temperatures, subtract the incoming water temperature from the desired output temperature. Assume that the incoming water temperature is 50 degrees F (10 degrees Celsius).
• You can estimate the GPM by holding a pan or bucket under a faucet or shower head and measuring the flow for one minute. You can also estimate the temperature by holding a thermometer under a cold-water faucet. The water should heat to 120º F (49º C).
• To reduce flow rates, you may prefer to install low-flow water fixtures.

Groundwater temperature - Knowing your area’s groundwater temperature helps you know much to heat the water. For example, in the southernmost United States, the average groundwater temperature is 65-70 degrees F. But the most northernmost states often see an average of 40 degrees or less. So, in an area with 55-degree groundwater, to get 100-degree water, a unit with a minimum temperature rise of 45 degrees is needed.

Household numbers – The number of people in homes helps to determine tankless water heater sizes. In most cases, if you live alone, you’ll need a smaller heater. For two residents, a 6–8 GPM heater is effective, while a family of four might need an 8–10 GPM heater. You may also use these measurements:

• For a home with one bathroom and 1 or 2 residents, consider a water heater of 140,000 BTUs (British thermal units, the standard unit of measuring heat).
• For a home with two bathrooms and 2 or 3 residents, consider a water heater of 190,000 BTUs.
• For a home with three bathrooms and 3 to 5 residents, consider a water heater of 380,000 BTUs.

Note: Safety experts generally recommended setting your water heater to 120 degrees F. Higher water temperatures, particularly 140-degree F, can significantly increase scalding risks.

Tankless Water Heater Installation and Maintenance

Whether used indoors or outdoors, the biggest consideration when installing a tankless water heater is its flow rate. The main differences between these models are the installation location and weather considerations.

• Indoor tankless water heaters are designed for controlled environments, like inside homes. They require sufficient space, ideally near a wall or in a utility closet. This provides easier access to plumbing lines, for improved maintenance and servicing. Depending on local building codes and the type of fuel source, more complex venting systems may be needed for tankless models.
• Outdoor tankless water heaters can be simpler to install in existing homes than indoor units. They may be slightly larger, but can be placed on exterior walls, saving interior space. Outdoor tankless water heaters may require fewer plumbing modifications. They're also made to withstand harsher elements, like heat or freezing temperatures. But weather-related issues can impact their efficiency.

To ensure your tankless water heater works properly, regular maintenance is crucial. Regardless of indoor or outdoor use:

• Clean the water inlet filter every few months to remove sediment.
• Descale the unit every 12-18 months to remove mineral deposits. If you have hard water, more frequent descaling is necessary, as mineral buildup can greatly reduce efficiency.
• Perform annual servicing to remove mineral buildup and ensure optimal performance. You may want to have this done by a professional service.

Gas vs. Electric Tankless Water Heaters

Once you’ve decided to install a tankless water heater, you must choose either a gas or electric model. Regarding the “electric vs gas tankless water heater” debate, know that both types have their own advantages and disadvantages.

Electric tankless water heaters utilize an electric element to heat the water. When making the electric vs gas tankless water heater decision, know the following:

• Electric units usually have higher efficiency ratings, around 98 percent, than gas models.
• They have lifespans comparable to traditional water heaters.
• Regarding tankless water heater sizes, electric models are more compact.
• Electric models are widely available.
• When considering an electric vs gas tankless water heater, electric units are easier to install than gas units. You will only requiring electrical wiring.
• Less maintenance is required for electric heaters than gas units.
• Electric tankless water heaters typically have smaller upfront costs than gas models, especially when local electricity prices are low.
• Household electrical systems may need to be upgraded. This may increase upfront costs, unlike that with gas water heaters.
• In most cases, electric models have lower flow rates than gas models. They’re ideal for smaller households with lower hot water demands.

Gas tankless water heaters use a gas burner to heat the water. They employ two types of fuel, natural gas or propane.

• They usually have longer lifespans than traditional (tank) or electric tankless water heaters.
• Gas models can produce a larger temperature rise per gpm than electric. This makes them the best choice for large households with higher heating demands.
• They are less (80-85 percent) energy efficient than electric units.
• Regarding the electric vs gas tankless water heater choice, gas models have a higher upfront cost. That's because they require additional venting systems and gas lines. But their operating costs are lower, especially if local natural gas is less expensive.
• Gas units typically require more maintenance than electric units.

Non-Condensing vs. Condensing Tankless Water Heaters

The two primary types of tankless water heaters are non-condensing and condensing.

• Non-condensing tankless water heaters originated first. They use heat exchangers to create hot water and vent the exhaust outdoors. These units require stainless steel flue pipes to withstand the heat of the exhaust, which can be more expensive than condensing heaters. They also tend to have lower installation costs and, with simpler technology, fewer opportunities to malfunction.
• Condensing tankless water heaters, developed more recently, use the high-temperature exhaust as an additional means of heating the water. These units tend to be more heat-efficient than other water heaters. They can also use less expensive PVC in the venting pipes but be more expensive overall.

Point-of-Use Tankless Water Heaters

Point of use tankless water heaters provide an alternative or supplement to models designed to supply a whole house. Relatively small, they can often fit inside a closet or cabinet. They tend to be dedicated-use devices, heating water for a single shower, washing machine or more. These models can be significantly less expensive than water heaters designed to heat a whole house. They may be more efficient as a supplement to a traditional water heater than as a replacement for one.

The best tankless water heaters for your home may be more expensive than traditional water heaters. However, tankless water heater installation offers energy efficiency that can save you money in the long run. Use The Home Depot Mobile App to see our selection of tankless water heaters and have it delivered to your doorstep.

What Is a Tankless Water Heater?

A tankless water heater heats water on demand, giving you hot water only as you need it. Depending on the model, a tankless water heater can supply hot water for your entire home or just a single point, such as a shower, sink or appliance. These water heaters are compact enough to allow installation in out-of-the-way spaces like in a closet or on an exterior wall.

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Selecting a Power Source

Tankless water heaters are designed to provide an endless source of hot water when sized properly, helping you save on energy since you’re not storing, heating and reheating the same water. They come in natural gas, propane or electric models, so you can choose the model that fits the energy source you already have and your personal preference.

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Deciding on Condensing or Non-Condensing Gas Tankless Water Heater

What is the difference between condensing and non-condensing gas tankless models? Condensing gas tankless maximizes system energy by using a dual heat exchanger. Non-condensing models only have one heat exchanger. Condensing systems are more energy-efficient as less heat is lost in the process of heating the water.

How Does a Tankless Water Heater Work?

When you open a hot water tap or start the dishwasher, a tankless water heater recognizes the need for hot water and starts the heating process. The unit then calculates the incoming water temperature and uses it to determine how much heat the burners must produce to deliver water at the desired temperature. Once demand ceases, the tankless water heater shuts down and stops using energy, waiting until you need more hot water to start heating again. The end result is that you’re no longer limited to the amount of hot water available in your tank.

Benefits of a Tankless Water Heater

A tankless water heater doesn’t limit you to the amount of hot water a storage tank heater can hold. Whether you're washing the dishes, laundering clothing and towels or drawing a hot bath, tankless water heater technology instantly supplies the hot water your lifestyle demands. There are other benefits as well.

Lower Energy Bills

Take advantage of greater energy efficiency with a tankless water heater compared to a standard gas tank water heater. These units have a highly efficient design because they only heat water when needed.

Longevity

Tankless water heaters typically last up to 20 years with proper maintenance, which is often twice as long as a typical tank-style unit. The expanded lifespan means you typically spend less money on repairs and replacements.

Space Savings

Traditional water heaters can take up to 16 square feet of valuable floor space. Many tankless water heaters are about the size of a carry-on suitcase; you can install these units on a wall inside or outside your home, freeing up valuable storage space

If you're having trouble deciding which tankless water heater is best for your home, our Water Heater Finder walks you through every step to help you find the best option.

Choosing the Right Tankless Water Heater

A tankless water heater gives you hot water on demand, but knowing how to pick a tankless water heater that’s right for your home requires some forethought. Start by determining what size tankless water heater you need. Water heaters that are too small typically don’t provide an adequate amount of hot water for your home’s needs, while a unit that’s too large means unnecessary costs.

Choose a tankless water heater that can easily handle the peak hot water demand in your home. To do this, you must know how much incoming water the tankless water heater needs to heat to take care of the demand. That’s where understanding the flow rate and desired temperature rise factor in.

The flow rate measures the amount of water that flows from a fixture or appliance in gallons per minute (GPM). Likewise, temperature rise is the difference between the groundwater temperature and the desired hot-water output temperature. When it’s time to buy a tankless water heater, arm yourself with the flow rate and temperature rise, but also look at sizing charts and consider your overall budget to guide you in choosing the best unit to suit your needs.

Flow Rate (GPM)

To estimate your hot water needs, determine how many devices the water heater will support. List the total number of appliances or fixtures you typically use simultaneously during peak demand. For example, you might need to use the kitchen faucet for washing dishes, a clothes washer for laundry and a shower faucet at the same time. Once you’ve decided how much on-demand hot water you need, add up each individual flow rate for the total flow rate.

Locate the flow rate in the manufacturer’s manual for the fixture or appliance (shower head, dishwasher, washing machine, etc.), or check for the GPM stamped directly on the item. You can also easily calculate the GPM of an appliance or fixture with a bucket and timer using the following formula: 60 divided by the number of seconds it takes to fill a 1-gallon container with water from the appliance or fixture. Here are some sample flow rates.

Average GPM Usage for Common Appliances and Fixtures

Based on the chart above, the total flow rate for peak usage while using the shower, kitchen sink and a high-efficiency washing machine is 6.0 GPM.

Temperature Rise

Groundwater temperature varies throughout the country and can range from the mid-30s to the upper 70s, measured in Fahrenheit. North America is broken into three climate zones with average groundwater temperatures:

• Northern Zone: 37 degrees to 51 degrees
• Central Zone: 52 degrees to 61 degrees
• Southern Zone: 62 degrees to 77 degrees

Typical internal home water temperature ranges from 110 degrees to 120 degrees. To determine the temperature rise, subtract the incoming water temperature from the desired internal water temperature. For example, if the incoming water temperature is 57 degrees and your desired shower water temperature is 120 degrees, the temperature rise is 63 degrees.

Your Budget

Keep in mind that tankless water heaters are typically more expensive than their conventional counterparts. While traditional tank water heaters can start at around $500 and go up to $ or more, tankless water heaters designed to supply a whole home typically start at around $1,000 or more. Prices vary widely by type and location, but you can expect the initial cost of a tankless model to be higher. These units can, however, save money over time with energy efficiency as well as lower maintenance and repair costs. Buying a tankless water heater may be the more economical option for many homes.

The cost of tankless water heater installation will depend on whether your home is already designed to support a tankless water heater, if your plumbing system will need to be upgraded and the labor costs for your area, among other factors.

Types of Tankless Water Heaters

There are two common types of tankless water heaters. Take a look at the options so you can decide which is best for your needs.

Point of Use Tankless Water Heaters

Sometimes, an area of your home needs an extra boost of hot water. That's where a compact point of use tankless water heater can help. These small, tankless heaters are typically electric models and are helpful near a room or appliance that needs additional hot water. For example, if you have a hot tub that uses electric heat, you can install a point-of-use water heater nearby. These units are also helpful for additions and expansions to an existing home. To save space, select a unit that installs easily in a cabinet or compact closet.

You can also look for electric tank water heaters and tankless gas water heaters with point-of-use technology for added flexibility in installation and added convenience.

Whole-Home Tankless Water Heaters

Some gas and electric tankless water heaters can deliver enough hot water for an entire household.

Whole-home gas tankless water heaters typically range in sizes from 140,000 BTU to around 199,000 BTU; choose the appliance capability based on the amount of hot water you need for a home or business. You can find:

• Tankless water heaters designed for one or two people
• Tankless water heaters for families of three or four
• Tankless water heaters for families of five or more

Whole-home electric tankless water heaters are available as 240-volt units with kilowatt (kW) ranges of about 14 to 32 kW. The higher the kilowatt rating, the more hot water the water heater can deliver.   

How To Install a Tankless Water Heater

You may be able install some electric tankless water heaters yourself, but first check national and local codes (ex. building, electrical, plumbing, gas). Codes may require that a licensed professional handle water heater installation. Follow the codes for your area and the instructions for your appliance. If you aren’t comfortable installing a tankless water heater yourself, Lowe’s offers professional installation options for most new units.

Installation steps typically include:

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• Choosing a location for the unit that’s near both a water inlet and an electrical or gas connection
• Shutting off the power or gas and the water supply to the area and verifying that they’re off
• Disconnecting and removing your existing water heater
• Prepping the new tankless water heater for installation per the manufacturer’s instructions
• Installing any new water lines necessary for operation
• Double-checking all the fittings
• Correctly connecting the unit to the power or gas supply
• Installing any ventilation required for the tankless water heater
• Mounting the unit in the desired location
• Connecting the water lines
• Turning the water and power or gas back on
• Checking to ensure the unit operates properly
• Making temperature adjustments as needed
• Double-checking all the lines and ventilation to ensure smooth operation

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