This is an archived article and the information in the article may be outdated. Please look at the time stamp on the story to see when it was last updated.

Is it worth getting a tankless water heater?

Keeping an eye on when you have hot water and how much is left can be a daily challenge. Traditional hot water systems don’t leave much flexibility in your schedule, whether it’s for taking a shower or washing dishes.

Tankless water heaters offer constant availability of hot water, but are they worth it? There are some pros and cons to be aware of before you install a tankless system.

What are tankless water heaters? 

Best heat exchanger

Tankless water heaters work by heating water on demand using either an electric or gas-powered heat exchanger connected directly to the pipes in your home. This means that when you turn on the hot water tap, a flow sensor tells the tankless heater to power up. 

Best showerhead

A thermostat in the tank sets the temperature of the burner inside the unit and heats the water as it flows through. The water leaves the heater and flows into the pipes, delivering the desired temperature out of your faucet or showerhead.

Tankless water heaters vs. traditional water tanks

Tankless water heaters do not work like traditional tank-based heaters that heat a set amount of water, usually 40 to 50 gallons. The hot water is then stored in an insulated tank, and once it’s gone, you need to wait for the tank to heat more water.

Because they heat so much water every day, traditional tanks aren’t energy efficient. And holding such a huge amount of water can be catastrophic if a malfunction causes flooding.

Best dishwasher

In contrast, tankless water heaters do not store any water. Instead, water flows through and is heated as needed — for example, if you turn on the shower or run the dishwasher.

Types of tankless water heaters

Gas-powered tankless water heaters

If you’re purchasing a gas-powered tankless heater, there is a significant installation process. Ventilation is required, typically through the roof but sometimes though a wall. This includes new air vents and ducts, due to the risks of gas burning in enclosed spaces.

So while the heater’s cost can be as low as $500, installation and venting add up. Gas-powered heaters also require an annual safety and efficiency inspection.

Small gas tankless heater units are relatively low cost. But if you have a large household and want enough power to run multiple hot water appliances at the same time, you’ll need a larger system. These larger systems are called gas condensing units, and they have a secondary heater to ensure you’ll have enough hot water for simultaneous use. 

If your home is not already hooked up to a gas line, you’ll also need to have gas service installed. In that scenario, an electric tankless water heater is generally far more cost-effective. 

Electric tankless water heaters

While gas-powered tankless water heaters are far more energy efficient than traditional systems, electric tankless heaters are even more efficient. Gas is typically cheaper than electricity, but electric tankless heaters last longer and have lower installation costs.

Electric tankless heaters are typically smaller than their gas counterparts. This makes them preferable for smaller homes or those with less space for installation. And installing an electric tankless water heater is simple, as you’ll skip the gas heater’s ventilation costs. 

Electric tanks do not require annual safety checks like their gas counterparts. Instead, you simply need to switch out the filter regularly.

Pros of tankless water heaters 

Unlimited supply of hot water

A tankless water heater supplies you with an endless source of hot water. This can be a huge advantage for large households that regularly see hot water run out. 

It’s important to remember, though, that tankless heaters are not endless; there is a limit to the amount of hot water they can supply at one time, known as the maximum flow rate. So if you regularly run multiple appliances that require hot water at the same time, you need to make sure your heater’s maximum flow rate can handle it.

Tankless heaters are economical

The U.S. Department of Energy estimates that a tankless heater is 24% to 34% more energy efficient than traditional tank-based heaters for homes that use under 41 gallons of hot water per day. 

This means tankless heaters can provide significant savings in your monthly energy bills, given that heating water is estimated at almost 20% of household budgets.

Cons of tankless heaters

It can take a while for the water to get hot

Tankless heaters can take longer to deliver hot water than tank-based heaters. This is because the heat exchanger has to be activated and powered up to heat water. 

It can take anywhere from a few seconds to a couple of minutes for hot water to start flowing out of the faucet. The speed at which your hot water is delivered depends solely on the quality of the heater you install. 

Tankless heaters are expensive to buy and install

Tankless heaters cost anywhere from $400 for small units to over $2,000 for large ones that can supply two showers simultaneously. 

While this might seem reasonable, installation can be expensive. The cost to install an electric tankless heater is between $600 and $2,500. For gas-powered tankless heaters, you can expect to pay between $700 and $4,600.

Is a tankless water heater right for you?

The decision to install a tankless water heater comes down to your budget and your home’s existing energy system.

The best way to decide is to add up costs such as the price of the heater and installation fees. You can also compare your existing energy bills with the projected monthly energy costs associated with a tankless heater. And keep in mind how long you expect to stay in your home. That way, you’ll get a clear idea of the initial investment needed and whether a tankless system will save you money in the long run.

Best tankless water heaters

Best Rheem 18-Kilowatt 240-Volt Tankless Electric Water Heater

Rheem 18-Kilowatt 240-Volt Tankless Electric Water Heater

This electric tankless water heater has an external digital thermostat so you can adjust the maximum temperature the water reaches. Advanced self-modulation means the heater automatically adjusts its power to meet demand for high energy efficiency.

Where to buy: Sold by Amazon and Home Depot

Best Rinnai 6.5-Gallons-Per-Minute Interior Tankless Hot Water Heater

Rinnai 6.5-Gallons-Per-Minute Interior Tankless Hot Water Heater

This gas-powered tankless heater requires professional installation. However, it’s suitable for multiple ventilation options depending on the structure of your home, so you can keep installation costs low. 

Where to buy: Sold by Amazon and Home Depot


Want to shop the best products at the best prices? Check out Daily Deals from BestReviews.

Sign up here to receive the BestReviews weekly newsletter for useful advice on new products and noteworthy deals.

Lauren Farrell writes for BestReviews. BestReviews has helped millions of consumers simplify their purchasing decisions, saving them time and money.

Copyright 2022 BestReviews, a Nexstar company. All rights reserved.