Updated on Oct. 29, 2024
If you want a constant supply of hot water while saving money on your energy bill, the best tankless water heater may be an ideal choice.
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Unlike storage water heaters, the best tankless water heater heats water directly. Also known as “on-demand” units, tankless hot water heaters take up less space than storage water heaters and use 30% to 50% less energy, which translates to lower energy bills.
“Tankless water heaters are known for providing hot water as it’s needed rather than storing the water in a limited capacity by the tank size,” explains Jessie Cannizzaro, a master plumber who owns Milestone Plumbing. “This is one of the positive things that a tankless water heater provides, more efficiency by not heating water that is not being used.” Cannizzaro says that tankless water heaters can either be used as a primary water heating source for houses or as a supplemental unit for portions of the home.
If you’re ready to upgrade your water heater, take a look at our finds for the best tankless water heater options and choose which unit suits your needs.
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For the average family of four, you can’t go wrong with the Rinnai Condensing Tankless Water Heater. This natural gas model is our pick for the overall best tankless water heater because it can heat up to seven gallons per minute of water.
However, running it around four gallons per minute will cost you only about $130 a year to operate. It’s Energy Star-certified, and you’ll have enough water to run the dishwasher and two showers simultaneously. If you have higher water needs, there are models under the same line capable of up to 11 gallons per minute.
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You’ll get hot water on demand without blowing your budget with the Ecosmart Tankless Electric Water Heater. This electric unit can heat three gallons per minute when the incoming water temperature is as low as 37 degrees Fahrenheit, making it an excellent option for homes in the Northern United States or in homes with a large tub or Jacuzzi. The digital temperature control allows you to set your temperature in one-degree increments.
“We just got our electric bill, and it dropped by 62 dollars. We love the space we save and the fact that now we can finally fill the tub without running out of hot water,” says five-star reviewer Shawn Roberts.
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If you’re looking to go electric and wondering about the best tankless water heater for the money, consider the Stiebel Eltron Tankless Water Heater. This model has an advanced flow control feature to keep water consistently hot during ongoing use, so your shower won’t fluctuate in temperature or go cold.
Plus, its digital display lets you see the accumulated cost savings, so you can see how much money you’ve saved by installing a tankless water heater. The 36 Plus model has a flow rate of seven and a half gallons per minute in warmer climates, which is plenty for most homes.
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On the fence about upgrading to a gas-powered tankless water heater? Consider this: You’ll likely never run out of hot water with the Rinnai Natural Gas Tankless Water Heater, which has a capacity of almost 10 gallons per minute. That translates to six running water fixtures at once, which is enough hot water for even the busiest homes. Plus, it’s the size of a small suitcase, so it can fit almost anywhere. It also comes with smart options if you purchase the separate Rinnai module for Wi-Fi connectivity.
“Produces an endless supply (>9 gallons per minute) of hot water at a constant 120 Fahrenheit. So far (90 days) no issues. The old tank water heater struggled to fill a jacuzzi tub. This does so with ease and very quickly due to the high flow rate,” says verified reviewer Dickie Coon.
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If you have a spot in your home that may require some extra “oomph” when it comes to hot water, the Bosch Electric Mini-Tank Water Heater is a tremendous point-of-use option and an Amazon top seller. This mini tankless water heater doesn’t require any professional installation and fits under your sink to provide more hot water where you need it. The unit offers up to four gallons of hot water at that fixture, so it cuts down on lengthy wait times before doing the dishes or taking a shower.
First, do you want to go with electric or gas? Both options offer benefits, but switching from a gas-storage water heater to an electric tankless model may require some electrical and plumbing updates (and vice versa). Some tankless models have smart capabilities, which you may find handy.
Next, think about how much hot water you’ll need at a time. If you’re going to run two showers, the dishwasher and the laundry machine at once, you may need a model that produces a higher volume of gallons per minute.
“In addition to the sizing calculations that need to be considered for proper functionality, the venting requirements for a tankless water heater are also important,” says Cannizzaro. You’ll need to check the venting setbacks from doors, openable windows, utilities, etc., she says.
Cannizzaro has another vital tip: “The most important item with a tankless water heater is to make sure it’s properly installed from the start. It may seem like a silly statement, but people would be shocked at the number of tankless installations we are brought in to help fix only to determine that the unit was never properly installed,” she says.
Finally, consider the purchase price. While tankless water heaters will save you money in the long run on your energy bills, some may be pricey in upfront costs.
I lived through a major home renovation in 2019 so I know the ups and downs of home improvement projects. I’m a veteran journalist of both print and television with experience covering everything from home decor and design to lawn and garden products. In addition to Family Handyman, I’ve contributed to various publications including Bob Vila, Taste of Home and Minnesota Parent; and have won several awards for writing.
We also consulted Jessie Cannizzaro for this article. Cannizzaro is a master plumber who owns Milestone Plumbing, a residential and small commercial plumbing business. She started the company in 2011 in her Wauwatosa basement and garage. She grew up joining her dad on the job at his plumbing company, learning to solder at the age of seven. Her passion for the business continued to develop over the years through apprenticeship and after earning her bachelor’s and MBA at UW-Milwaukee. Besides supervising 16 employees, she advocates for multiple organizations that encourage high school students to enter the trades.
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Tankless water heaters have no storage tank. Instead, they heat water directly only when you need it. Turn on hot water, and a supply of cold water travels into the tankless unit and heats up via an electric element or gas burner. This gives you a constant supply of hot water.
“Multiple units often are necessary to get the correct volume and pressure for the fixtures within a home to operate correctly,” warns Cannizzaro. “Multiple tankless units also increase the costs for installation. They may also require that the water piping and gas piping be increased to provide additional capacity as well,” she adds.
“One common misconception that we hear is that tankless water heaters provide instantaneous hot water, which is not true,” reveals Cannizzaro. “The distance the tankless water heater is located from the fixtures will determine how long it takes for hot water to arrive—if there is a recirculation pump installed for the tankless that will allow the hot water to arrive quicker.”
“It’s important for people to know that there is annual maintenance that is necessary to keep the unit operating at optimal levels. Technically, all water heater manufacturers recommend some level of annual maintenance, but tankless models are more susceptible to having issues if that maintenance is not performed regularly,” says Cannizzaro. This means cleaning or replacing the water filter, cleaning the air filter (for gas units) and descaling and flushing the system. You can do this yourself or hire a plumber.
“Another challenge with some tankless water heaters can also be the availability of parts. With many traditional tank-style water heaters, parts are readily available, which makes the time a client is without hot water shorter,” notes Cannizzaro. If you go tankless and need a repair, parts may be harder to find, which may leave people without hot water for an extended period.
If you install a tankless water heater, you may qualify for a federal tax credit under the Energy Efficient Home Improvement Credit. If you made qualified energy-efficient improvements to your home after January 1, 2023, you may qualify for a tax credit up to $3,200. For instance, Energy Star-certified water heaters that use natural gas could get you up to $600 back. You can claim the credit for improvements made through 2032. The manufacturer should also have information on what models qualify for various credits.
From tankless to traditional models, our expert tips will help you find the right water heater for your home and budget.
