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.

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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.

Making sure you have a properly sized water heater is very important. If your water heater is too small, your home won't have enough hot water to meet demand, which is an obvious inconvenience, and overloading the unit may cause premature wear and tear.

There's no benefit to oversizing a tankless water heater. If your tankless water heater is too large it will never operate up to full capacity, and the system may cost more than necessary.

Tankless Water Heater Size Calculator

Our free Navien water heater sizing tool, NaviSizer, is especially effective in helping people find the right size water heater for their project. 

Try NaviSizer

NaviSizer uses information you provide, including number of people in your household, number of bathrooms, fuel type and region (for local groundwater temperature) to help you choose the right size model.

How Tankless Water Heater Sizing Works

There are two primary factors to consider when determining the right size water heater.

The first is the maximum flow rate required by the hot water system, measured in gallons per minute (GPM). Maximum flow rate is determined by the number of fixtures (e.g. washing machine, dishwasher, shower) that will be used at the same time, and the flow rate of each. 

For example, if your home would use a dishwasher (2-3 GPM), a shower (2-3 GPM) and a washing machine using hot water (3-5 GPM) all at once, that would be a maximum flow rate of 7-11 GPM.

These are estimated flow rates - a licensed plumber can provide a more accurate estimate for the fixtures in your home. Your water pipe sizing, especially the incoming water supply, can also affect flow volume.

Temperature rise is the other critical factor. Temperature rise is simply the difference between the desired temperature setting of the water heater and the inlet water temperature.

For example, if the hot water temperature is set to 120°F and if the incoming water temperature is 55°F the resulting temperature rise is 65 degrees (120-55=65).

Typically, residential hot water temperature settings are 120°F or 125°F, and commercial temperatures can range from 140°F to 180°F, depending on the application.

Since incoming water supply temperature can vary based on the season, temperature rise should be calculated based on the coldest days of the year.

When you you know the required flow rate and the temperature rise, you can compare them to the tankless water heater output.

You can find this information on each Navien tankless water heater model page on our website, in the QuickFacts section under Temperature Rise. Maximum flow rate can also be found in the QuickFacts download for each model.

Domestic Hot Water (DHW) Capacity

Tankless water heater capacity is rated based on the gas energy input, which is given in BTU/h (British Thermal Units per hour). You’ll see this measurement when comparing different models of Navien tankless water heaters.  The higher BTU, the greater the maximum flow a tankless unit can produce.

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