How to Save Money When Buying instant hot water heaters for showers

Tankless water heaters are growing in popularity because they eliminate the need to continually heat water in a tank, meaning your energy costs remain the same throughout its lifespan. In addition to the cost savings, tankless water heaters are compact, and your hot water will have less of a chance of running out.

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In this guide, we’ll explain how a tankless water heater works and the advantages of using one. We’ll also compare a tankless water heater to a conventional storage water heater. Then, we’ll provide you with the tankless water heater brands we recommend, helping you make an informed decision.

What Is a Tankless Water Heater?

A tankless water heater, also known as a demand-type or instantaneous water heater, provides a household with hot water as needed. It doesn’t require a tank to store water like a conventional water heater because it doesn’t continually heat water. Instead, it heats water on demand so you won’t run out of hot water.

How Do Tankless Water Heaters Work?

When you turn on your hot water faucet, water flows to your unit’s heat exchanger, and either a gas or electric component heats the water, which then travels through the pipes. 

Here’s an in-depth description of how a tankless water heater delivers hot water to your faucet:

1. A flow sensor detects water coming into the heater and sends a signal to the control panel to produce hot water.
2. In a gas-fired unit, the control panel turns on the fan, which draws in outside air, opens the gas valve that lets in the gas, and ignites the burner.
3. The heat exchanger captures heat from the flames and transfers it to the water moving through the exchanger’s tubing.
4. The mixing valve tempers the superheated water exiting the exchanger.
5. If the temperature sensor detects that the water exceeds or falls short of the desired setting, the panel will adjust the gas valve, the mixing valve, and the flow-regulating water valve accordingly.
6. A sealed vent (or pair of vents) through a roof or outside wall carries away exhaust gasses and conveys combustion air to the burner.

How To Select a Tankless Water Heater

Your hot water needs and budget will help you determine which tankless water heater type to choose, but other factors play a crucial role in the selection process, including:

• Condensing vs. non-condensing technology
• Efficiency ratings
• Fuel type
• Installation location
• Size and capacity

Condensing vs. Non-Condensing Technology

A condensing tankless water heater traps condensation and then recycles it to heat water rather than releasing it into the atmosphere. It can also collect the heat from exhaust gasses by using an additional heat exchanger. The benefit of using a condensing tankless water heater is greater energy efficiency, resulting in lower costs. Another advantage is that your options for ventilation are less expensive since the exhaust from the system is cooler.

Non-condensing tankless water heaters have a single heat exchanger. The water flows through the exchanger, and any unused exhaust heat releases through a vent. They’re less of an investment upfront, but the metal venting they require because of their higher exhaust temperatures can be expensive. They also aren’t as efficient as condensing heaters because they don’t use recycled heat from the exhaust to warm your water.

Energy Efficiency Ratings

The more energy-efficient your tankless water heater is, the less it will cost to heat your water. The energy efficiency ratings for these water heaters are determined by their uniform energy factor (UEF). The UEF measures how much energy your tankless water heater uses and how much energy is required to power the heater itself. A higher UEF means the water heater is more efficient.

You can learn the estimated UEF of your water heater by checking its Energy Guide’s yellow label. Every residential water heater should have one. Compare your current UEF with other models to learn which ones provide the proper energy output for your household.

Fuel Type: Gas vs. Electric

The fuel type affects the water heater’s size, capacity, and operation costs. There are also some differences in efficiency.

Electric Tankless Water Heaters

Electric tankless water heaters heat water using thick copper wire rods. They’re less expensive than gas-powered ones but aren’t efficient if you run multiple hot water devices. They may struggle to keep up with multiple appliances at the same time. 

Installing an electric water heater is easier than a gas heater, but you might have to upgrade your electrical system. Your water flow may be weaker, but they’re quieter, smaller than gas-powered water heaters, and more eco-friendly.

Gas Tankless Water Heaters

Gas tankless water heaters are powered by natural gas or propane tanks. They’re more expensive than electric ones, but part of the reason is that the installation process is more complex. Installation requires access to a natural gas line and ventilation. Gas tankless water heaters are more efficient and heat the water faster than their electric counterparts. They can also service several appliances at the same time.

Indoor vs. Outdoor Installation

A plumber can install an instant hot water heater inside or outside. Outdoor tankless water heaters have vents with free airflow. They’re designed to be outdoors, but you must drain them if you live in an area that drops below freezing in the winter. Existing homes benefit from outdoor installation since indoor units require plumbing adjustments.

Indoor units require some ventilation piping and must connect to a drain to pull away water caused by condensation. Indoor water heaters aren’t exposed to the elements and don’t need as much maintenance and care. You might need to upgrade your existing gas line or electrical system to install an indoor tankless water heater.

Size and Capacity

The correct size water heater will meet your household’s hot water needs and work efficiently. Tankless water heaters are rated by temperature rise at a given flow rate, and they’re calculated in British Thermal Units (BTUs). You can find a water heater’s BTUs in the specifications and compare that number to your household’s total BTU needs. If you find that one water heater isn’t enough to meet your demands for endless hot water, you can install two or more tankless systems.

Tankless Water Heaters vs. Tank Water Heaters

Most homes have tank water heaters, but tankless are gaining in popularity. Tankless heaters use less energy, resulting in lower costs, but they aren’t ideal for every home. In comparison, you can install tank water heaters in any home, and the tank water heater installation cost is lower than its tankless counterpart. Yet the average tank water heater has a lifespan of 10–15 years and is generally less efficient toward the end of its life, using a lot of energy to heat water and costing you more money.

Key Differences

Tankless and tank water heaters serve the same purpose, but they have several key differences. Below we’ve compared the differences between the two:

*Cost data in this section from Fixr and HomeAdvisor.

Pros and Cons of Tankless Water Heaters

This is definitely a job for a pro, as it involves making leak-free water, vent, and gas connections, in the case Tankless water heaters have many advantages, but there are also a few disadvantages to choosing a tankless over a tank water heater. Below we cover the pros and cons of instant hot water heaters.

Tankless Water Heater Pros

• Lifespan is 15–20 years
• Offer an endless supply of continuous hot water, whereas a tank water heater eventually runs out of hot water
• Save space with a compact size
• Since tankless heaters only heat water on demand, they are energy efficient, reducing utility bills

Tankless Water Heater Cons

• Although you never run out of hot water, a tankless water heater’s output has a limited flow rate and might struggle to meet your household’s demand on the system
• Cost more to purchase and install compared to tank water heaters
• Slight delay in hot water delivery to fixtures
• You may need to upgrade your gas line or electrical system

Cost of Tankless Water Heaters

The average tankless water heater cost is $2,600*, but the range is anywhere from $1,300–$3,900. High-end brands can cost up to $6,000. Your on-demand water heater’s cost will depend on factors such as brand, model, and installation complexity.

Instant hot water heaters can work as single-point systems or heat water for the whole house. Single-point water heaters, or point-of-use water heaters, usually service a showerhead or faucet and heat 0.5–2 gallons per minute (GPM). They cost between $100 and $300. 

The tankless water heater installation cost varies because you may have to upgrade your gas line or electrical system to accommodate a tankless system, but the national average is $2,500. Keep in mind that these are estimates and that installation pricing also depends on how much hiring a plumber costs in your area.

*Cost data in this section from Angi and Fixr.

Tankless Water Heater Sizing

As previously mentioned, selecting the correct size tankless water heater ensures your system will work efficiently. By learning your total BTU needs, you can compare it against a water heater’s specs. 

Your total BTU output requirement is your household’s temperature rise at a given flow rate. The flow rate is measured in GPM and your temperature rise is the temperature at which your water initially runs subtracted from your desired hot water temperature.

You can get an accurate rating of your heater output. To determine your desired temperature rise and flow rate requirements and then compare them to tankless water heater specs, take the following steps:

1. Estimate how many hot water devices you likely use at any given time.  
2. Calculate each device’s flow rate (GPM). You can do this by placing a large bucket under the faucet and running it for a minute. Then, measure how many gallons filled the bucket. Here are some average fixture flow rates for your reference:
   • Dishwasher: 1–2.5 GPM
   • Kitchen or bath faucet: 1.5–2.2 GPM
   • Showerhead: 1.25–2.5 GPM
   • Tub filler faucet: 4 GPM
   • Washing machine: 1.5–3 GPM
3. Add all the appliances’ flow rates together to get the maximum flow rate. 
4. Once you have the flow rate, you have to determine the temperature rise. Measure the incoming water temperature with a thermometer. Subtract that number from your desired output temperature to get the temperature rise, which is usually 120 degrees Fahrenheit. See the map below for the average groundwater temperature if you don’t have a thermometer. 
5. Compare the specs on a tankless water heater to your maximum temperature rise and flow rate to find the correct size for your household.

If you don’t want to do the math, below are average BTU estimates according to how many people live in a household:

• One bathroom, one or two people: 140,000 BTUs
• Two bathrooms, two or three people: 190,000 BTUs
• Three bathrooms, three to five people: 380,000 BTUs

If you have difficulty determining your temperature rise or water flow rate, contact a plumber or home improvement professional who can help you figure out which tankless water heater size is right for your household.

BTUs Per Gallon by Region

Popular Tankless Water Heater Brands

A tankless water heater’s performance depends on the quality of the system. Some brands are designed with performance and efficiency in mind. In this section, we’ll introduce some manufacturers known for quality and reliability, but we recommend you find a local plumber for professional guidance. They’ll help you to select the best brand and model for your specific needs.

Rinnai

Our top pick for a tankless water heater is Rinnai. It makes both condensing and non-condensing tankless water heaters, specializing in gas or propane systems. It also provides guidance if you want to convert to an electric water heater. Rinnai tankless water heaters last twice as long as other brands and some connect to WiFi, which allows you to control your heater with an app. It also has technology that helps the heater learn your water usage patterns so that you get your hot water faster.   

Other Leading Brands

If you can’t find what you’re looking for from Rinnai, we have a few other trusted brands that sell premium tankless water heaters. Those include the following:

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• Bosch: Bosch offers both electric and gas models at compact sizes. They’re highly efficient, which means you won’t waste energy or money trying to heat your water.
• Noritz: Noritz has high-efficiency condensing gas units that you can place indoors or outdoors. Every system comes with a 12-year warranty, and all its customer service reps are certified water heater specialists, providing excellent care from installation to service.
• Rheem: Rheem offers a variety of gas and electric models at a good value. It sells condensing and non-condensing heaters with WiFi technology similar to Rinnai.
• Takagi: Takagi makes durable gas-fired heaters. Its heaters are commercial grade and provide different maximum flow rates.

DIY vs. Pro Tankless Water Heater Installation

When installing a new tankless water heater, there are a few things you need to consider. If you had a tank water heater, you may need to retrofit a tankless heater. This could mean upgrading your electrical system or gas lines. You’ll also need to ensure your unit is properly ventilated and consider installing more than one, depending on your hot water needs.

Installing a tankless water heater requires an advanced do-it-yourself (DIY) skill level, as well as some plumbing and electrical experience. In addition, some tankless water heater brands may require proof of professional installation to secure your warranty. Since they’re complex systems, we recommend hiring a plumber near you and contacting an electrician to ensure proper connection to your water supply and setup installation.

Tankless Water Heater Maintenance

Although installing a tankless water heater may be difficult, you can maintain your system yourself. Maintaining your tankless water heater will prolong its life and ensure efficiency. Some steps you have to take to maintain a tankless water heater include the following:

• Cleaning the exterior: Keeping the exterior clean will help you avoid getting dirt and debris into interior components
• Descaling the system: If you have hard water, you’ll want to descale mineral buildup or sediment
• Flushing the unit: Flushing your tankless water heater removes debris
• Replacing air filters: Clean air filters ensure proper ventilation

Is a Tankless Water Heater Worth It?

Opting for a tankless water heater is worth it for several reasons, including:

• Energy efficiency: Since your tankless water heater doesn’t continuously heat water, it uses less energy than a traditional tank water heater.
• Less expensive: Although installing a tankless water heater does have higher upfront costs, the energy savings will lower your utility bills.
• On-demand hot water: A tankless system heats water when you turn on the hot water faucet, so your hot water never runs out.
• Space savings: A tankless water heater’s compact size allows you to place it in most places inside or outside your home.

Our Conclusion

Tankless water heaters are energy-efficient and compact. They provide hot water on demand, which could result in lower utility bills. Consider switching from a traditional tank water heater to a tankless system if you don’t have many hot water demands or want to lower your energy consumption. Remember to find the correct size tankless water heaters to meet your household needs and properly maintain your system to ensure it works efficiently. We recommend you get quotes from reputable plumbers in your area for installation estimates.

FAQ About Tankless Water Heaters

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.

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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