how to choose a tankless hot water heater

How to Choose Your Tankless Water Heater, 5 Things You Need to Consider

Your home cannot be without hot water, it is as simple as that. Tankless hot water heaters are a very energy efficient way of providing hot water where it is needed in your home. Tankless heaters are usually cheaper to run, they last a lot longer than their tank alternatives, and they take up far less storage space. However, deciding how to choose your tankless water heater can be challenging, which is why we have written this article, focusing on the 5 main things you need to consider when buying a tankless water heater.

Point of Use or Whole House Tankless Heater

There are two main kinds of tankless water heater available, these are point of use / single-point or whole house heaters.


Point of use hot water heaters are designed to heat 1 appliance and usually sit directly alongside that appliance. This may be a single sink, a shower, or a bath where hot water is required. Using a point of use tankless heater is a quick and easy way of providing hot water where it is needed. However, with that said, point of use tankless hot water heaters are not suitable for most homes and tend to be used in outside home offices, garages, or a utility area. If you are looking to supply hot water to the entire house, then it’s a whole house tankless water heater than you need.

What Size Tankless Water Heater Do I Need?

How big a tankless water heater do you need? A good contractor will usually work this out for you, so there is usually no need to worry about it. However, before you spend $1,000+ on a whole house system we recommend that you have a basic understanding of how to size a tankless water heater so that you can be sure you’re being sold the right item to meet your hot water requirements. In order to figure out what size you need you need to ask the following questions:

  1. What is the surface water temperature in the state / region in which you live?
  2. How many appliances do you have in your home?
  3. How many appliances do you intend to use simultaneously, e.g. shower and a faucet, or two showers?
  4. What is the flow rate (gallons per minute / GPM) of the appliances which require hot water?

The surface water can be calculated by looking at the map on this page. For example, the average surface temperature is around 50 degrees Fahrenheit.

how to choose the right size tankless water heater

Once you know the surface water temperature then you need to add together the flow rates in GPM for the appliances you intend to have running simultaneously. For example, you may wish to run a hot water faucet at 0.70 GPM and a shower at 3 GPM, this would mean you need a total flow rate of around 3.70 – 4.0 GPM in order to meet the water demand and provide hot water whilst both appliances are in use.

Next, you need to calculate the raise in temperature required to bring the incoming water to the temperature required by the appliance. For example, if you require 100 degrees water temperature at your appliance and your surface water temperature is 50 degrees, then you will need to raise the temperature by 50 degrees.

Therefore, in the above example you will need a tankless water heater which can provide 4 GPM of water flow, at a temperature raise of 50 degrees. It’s important to note this as most stores, including  HomeDepot, will quote that a tankless heater provides X GPM flow rate but this may change with the required rise in water temperature. For example, a water heater which provides 9.5 GPM, such as this performance tankless heater by Rheem, quotes a flow rate of 9.5 GPM but at a rise of 35 degrees. This quoted flow rate will decrease the higher the temperature rise required.

This is an important fact to keep in mind when choosing a tankless water heater.

Indoor Vs Outdoor Tankless Hot Water Heater

An indoor tankless water heater is, as you would expect, installed inside the home, whereas an outdoor heater is installed outside. There are advantages and disadvantages of indoor vs outdoor tankless water heaters, which essentially come down to space and the climate you live it. Essentially, if you have space then an indoor heater is preferable, particularly in colder climates where the threat of freezing temperatures may require you to drain the water heat in order to avoid freeze damage.

Power Supply, Gas vs Electric Tankless Water Heaters

There two main power supplies available for a tankless water heater include gas and electricity. Which you choose will very much depend on your budget, space, and your heating requirements. The following two tables compare gas vs electric tankless water heaters:

Compare Electric Vs Gas Tankless Water Heaters
Gas Tankless Water Heater
Pro’s Pro’s
  • Provide a good, reliable supply of hot water
  • Are able to heat up water more quickly than electric
  • Gas is cheaper than electricity.
  • Much easier to install than gas
  • Are smaller and require less storage space, particularly with indoor units
  • Do not require additional ventilation and therefore can be installed pretty much anywhere.
Con’s Con’s
  • Are often complicated to install and therefore more costly in labor
  • Are larger than electric units and require more space, particularly when installed indoors
  • Require additional ventilation to the outside and therefore require access to an external wall
  • Gas is usually less efficient than electricity
  • Gas can delivery hotter water, with much higher flow rates than electric.
  • Usually take longer to heat up the water
  • Electricity is more costly than gas
  • Can be more costly to run than gas units but their increasing efficiency is changing this
  • Electric units can deliver lower flow rates than gas units.

Your Budget

Everyone needs hot water, and therefore everyone will need a water heater of some sort, however if you choose a tankless hot water heater then the brand (Rheem, Rinnai etc), type (point of use or whole house), fuel supply (gas or electric) and location (indoor or outdoor) you choose to install it in will all affect the cost of a tankless water heater and therefore be dictated by your budget.

The average cost of a point of use tankless water heater is between $250 – $750, including installation. The average cost of a whole house tankless water heater, however, will cost you significantly more at prices up to $3,200.

Gas tankless water heaters are significantly more expensive than electric ones, with prices being around $300 – $1,300 for an indoor electric unit but $360 – $3,200 for an indoor gas unit. This is in part due to the fact the units are a little more costly to buy, but mainly because installation with gas units is higher due to the more complex work involved.

Rheem, Rinnai and Noritz are 3 of the more expensive brands with units priced as high as $2,100, excluding installation and permits. American Standard, A.O. Smith, Eccotemp and Ecosmart provide more affordable heaters with prices up to $1,000 for the most expensive unit.

In Conclusion

In conclusion, these are the main factors you should consider when choosing or replacing a tankless water heater. This list isn’t exhaustive by any means, but it should provide you with a starting point so you’re more prepared when you look through a breakdown of tankless water heater estimates.

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