How to Choose a Tankless Water Heater?: A Buyer’s Guide

What is a Tankless Water Heater?

Tankless water heaters take up much less space than storage water heaters as they heat the water directly.

When you turn on the hot water, the cold-water travels through a pipe and into the tankless water heater unit where it is heated by a gas burner or an electric element. This allows you a constant supply of hot water.

On average, tankless water heaters can provide 2 to 5 gallons of hot water per minute. Gas-fired tankless water heaters, according to, can produce higher flow rates than electric models.

For those with large families who go through a lot of hot water, installing more than one tankless water heater is common. This will ensure there is always enough hot water available for showers, laundry and the dishwasher.

How to Choose a Tankless Water Heater

How Tankless Water Heaters Work

Tankless water heaters heat water instantaneously without the use of a storage tank. When a hot water faucet is turned-on, cold-water flows through a heat exchanger in the unit, and either a natural gas burner or an electric element heats the water.

As a result, tankless water heaters deliver a constant supply of hot water. You don’t need to wait for a storage tank to fill up with enough hot water. However, a tankless water heater’s output limits the flow rate.

Typically, tankless water heaters provide hot water at a rate of 2–5 gallons (7.6–15.2 liters) per minute. Gas-fired tankless water heaters produce higher flow rates than electric ones.

Sometimes, however, even the largest, gas-fired model cannot supply enough hot water for simultaneous, multiple uses in large households. For example, taking a shower and running the dishwasher at the same time can stretch a tankless water heater to its limit.

To overcome this problem, you can install two or more tankless water heaters. You can also install separate tankless water heaters for appliances — such as a clothes washer or dishwater — that use a lot of hot water in your home. However, additional water heaters will cost more and may not be worth the additional cost.

Other applications for demand water heaters include the following:

  • Remote bathrooms or hot tubs
  • Booster for appliances, such as dishwashers or clothes washers
  • Booster for a solar water heating system.

There are several different types of tankless water heaters, each with their own advantages and disadvantages. Consider each type before committing to your new water heater.

Types of Tankless Water Heaters

#1. Gas

Propane or natural gas-powered tankless water heaters often heat water more quickly than electric tankless water heaters can. Gas and propane are also less expensive than electric power, but they cost more to install than electric heaters and require more maintenance.

#2. Electric

Gas water heaters are more efficient than electric water heaters in the long term, but electric heaters are generally less expensive to install. They also don’t require a ventilation system, which means you don’t necessarily need to put them in an area with existing pipes. Electric water heaters can be installed almost anywhere, even in small spaces.

#3. Indoor

Installing your tankless water heater indoors will ensure that it isn’t exposed to the elements. If you live in an area with often changing and harsh weather conditions, an indoor water heater is best. Indoor heaters require ventilation piping to direct airflow, which will increase installation costs.

#4. Outdoor

Outdoor water heaters work best for homes in areas with mild weather. They ventilate themselves, so they don’t require added ventilation pipes. While outdoor water heaters are designed to withstand things like wind, rain and snow, they do require more maintenance than indoor water heaters.

#5. Condensing

By extracting heat from the exhaust before releasing it into the venting system, condensing tankless water heaters eliminate the need for expensive flue pipes and venting materials. And they use that extracted heat as an additional way to heat water.

Typically, condensing tankless water heaters are more expensive to purchase than their non-condensing counterparts. But they have lower installation costs and higher energy efficiency, so the cost is lower in the long run.

#6. Non-condensing

Non-condensing water heaters use heat exchangers to heat water and then vent the exhaust outdoors. They need stainless steel flue pipes to withstand the heat of the exhaust, which can increase installation costs.

In general, non-condensing water heaters are more expensive to install than condensing water heaters, but they are less expensive to purchase upfront.

If you’re thinking about buying a propane tankless water heater, you may be overwhelmed by the choices. We created a top-five list here based on factors like pricing, customer rating, max GPM, heating capacity (BTUs) and Energy Star certification.

How to Choose 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.

What to Consider When Buying a Tankless Water Heater?

Determine How Much Hot Water You Need

How much hot water does your home use at peak times? This is a critical question to answer when choosing a tankless water heater.

Sinks, washing machines, and showers all demand hot water. The kind of tankless water heater you get is largely dependent on how many of these fixtures you use, what the flow rate is of each, and how many you would use at once in any given time of day.

For example, maybe you have a household of 6 people, and have 3 showers running in the morning, along with 1 load of laundry. Find out the flow rate of your showers and laundry combined, and there you have your peak hot water demand.

Simply put, if you have a high hot water demand, you’ll need a tankless water heater with enough power to match it.

Size Of Tankless Water Heater

There are several sizes of tankless water heaters on the market. The right one for your home depends on how big your family is and, therefore, how much hot water you’ll need.

Having one that’s too small will mean less hot water for everyone. Having one too large will be more expensive to run than necessary.

You can determine the right size for your home by figuring out how many fixtures you will want to operate simultaneously and how much hot water each one uses. Added together, this will give you the desired capacity of your hot water heater.

You can opt to have one whole-house tankless water heater or several smaller point-of-use water heaters designed to focus on one appliance or faucet.

Point-of-use heaters are usually installed as close as possible to the actual appliance it’s sending hot water to, eliminating lag time so you won’t have to wait for your water to heat up.

Fuel Type Of Tankless Water Heater

Gas and electric tankless water heaters are both excellent choices, but each has pros and cons.

Gas-powered tankless water heaters are more expensive and require more maintenance than electric water heaters, but they are capable of heating a larger amount of water at any given time.

Electric heaters don’t require venting, so you can place them virtually anywhere in your home. But keep in mind that if your hot water needs are high, you may need to upgrade your electrical system to accommodate the added power consumed by your water heater.

Ultimately, the type of tankless water heater you purchase is dependent on your personal needs. Talk to a qualified professional to determine which fuel type is best for you.

Flow Rate (GPM) of Tankless Water Heater

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.

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.


We recommend that you get your tankless hot water heater serviced by a professional at least once a year. Increase that to twice a year if you live in a very cold area or if you consistently have hard water.

Electricity-powered heaters don’t need as much maintenance as gas-powered ones, but we still recommend you get them checked by a professional to make sure everything’s working properly.

Consider this extra cost when shopping for your new tankless water heater. Most professionals charge between $45 and $130 per service.

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 $1000 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.

Tankless Water Heater Advantages

Tankless water heaters (also called “on demand” units or an instant hot water heater) use 30 to 50 percent less energy than units with tanks, saving a typical family about $100 or more per year, depending on water usage.

  • These units heat water only when you turn on the faucet.
  • They usually operate on natural gas or propane.
  • The main advantage is that they eliminate the extra cost of keeping 40 to 50 gallons of water hot in a storage tank, so you waste less energy.
  • They also offer a continuous supply of hot water, which is ideal for filling a big hot tub or a whirlpool.
  • They’re more compact than a standard water heater and mount on a wall

Tankless Water Heater Disadvantages

  • The primary disadvantage of on demand or instant hot water heaters is the upfront cost.
  • The smaller units that you often see won’t produce enough hot water to serve most households. They’ll only serve one faucet at a time—a problem if you want to shower while the dishwasher is running. There are larger units that can handle the demand of a whole family, but they are expensive.
  • But because tankless units have high-powered burners, they also have special venting requirements (a dedicated, sealed vent system, which requires professional installation). Natural gas burners often need a larger diameter gas pipe, which adds to the initial installation cost.

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:

  • 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

Special Features of Tankless Water Heater

Tankless water heaters include these special features:

  • Built-in recirculation pumps prove useful when the heater is more than 50 feet from the appliance and can recirculate cold water. They can be set by timer, push button and motion sensor.
  • Wireless connectivity can allow recirculation pumps to be set by smart phone or smart speaker, as well as notify you when the unit needs maintenance.

Note: Wi-Fi connectivity now allows you to set the temperature and monitor energy usage from your phone. Some units can identify the specific cause of issues, like buildup in the pipes (scale) so you can inform your plumber.

The best tankless water heaters for your home may be more expensive than traditional water heaters, but tankless water heater installation offers energy efficiency that can save you money in the long run.