How to Choose a Tankless Water Heater
But not all tankless water heaters are created equal, and choosing the right one requires understanding how they work, your household’s needs, correctly sizing the system, and which features deliver the best long-term value.
Choosing a tankless water heater is one of the most impactful decisions you can make when upgrading your home’s plumbing system. Unlike traditional tank water heaters that constantly heat and store water until it’s needed, tankless systems provide hot water on demand. That difference not only affects performance — no more running out of hot water — but also energy efficiency, operational costs, lifespan, and space requirements. But not all tankless water heaters are created equal, and choosing the right one requires understanding how they work, your household’s needs, correctly sizing the system, and which features deliver the best long-term value.
If you’re considering a tankless system, you probably already know that these units heat water only when you turn on a tap or start a cycle. The result is hotter water when you want it, less heat loss, and lower energy usage because you aren’t storing and reheating water all day. But “on demand” is just the beginning of the story. Performance varies between models, fuel types (gas vs electric), flow rates, installation requirements, and overall efficiency. A properly chosen tankless water heater can reduce energy bills, increase reliability, and dramatically improve your daily routine — especially in households with high hot water demand. Choosing the right system starts with understanding how these units work and how they align with your unique household patterns.
Understanding How Tankless Water Heaters Work
Tankless water heaters — often called “on-demand” systems — operate under a simple principle: heat water only when it’s needed. When a hot water tap is turned on, cold water travels through a heat exchanger inside the tankless unit. A gas burner or electric element heats the water to the set temperature, delivering a steady flow of hot water until the tap is turned off. There’s no tank holding gallons of pre-heated water waiting to cool, so standby heat loss — wasted energy — is virtually eliminated.
Because of this on-demand process, tankless systems deliver almost limitless hot water at a constant temperature, assuming the unit is correctly sized. The key performance factor is the flow rate, usually measured in gallons per minute (GPM). Larger houses, simultaneous bathroom use, and high-volume appliances like dishwashers or washing machines draw more hot water at once. A properly sized tankless system handles all these demands without running out — something that traditional storage tanks struggle with during peak use.
Tankless water heaters typically last longer than traditional tank systems. With fewer components subject to constant heat cycling and corrosion, tankless units often reach twenty years or more with proper maintenance. That improved lifespan, plus lower energy consumption, often offsets the higher initial cost over the unit’s lifetime.
Matching Your Hot Water Demand with the Right Size
One of the most important steps in choosing a tankless water heater is sizing it correctly for your household. Undersized units struggle to supply enough hot water to meet demand, leading to lukewarm showers or uneven temperatures. Oversized units, while they may deliver plenty of hot water, cost more upfront and may cycle inefficiently.
Sizing revolves around two main factors: maximum flow rate (GPM) and temperature rise. The maximum flow rate is the number of gallons per minute your household is likely to use at peak demand. For example, simultaneous showers, dishwashing, and laundry may total six to eight GPM or more. You need a unit that can deliver hot water at that rate without dropping below your desired temperature.
Temperature rise is the difference between the incoming cold water temperature and your desired output. In colder climates, incoming water may be freezing in winter, requiring more energy to heat to the desired levels. In warmer climates — like Phoenix/Anthem, AZ, — the incoming water temperature is often higher, reducing the energy required to achieve a comfortable hot-water set point.
A professional plumber can calculate your household’s peak demand and incoming water temperatures to recommend a tankless model with adequate flow rate and heating capacity. Most manufacturers provide flow rate charts showing how various models perform at different temperature rises so that you can match the unit to your climate and usage.
Gas vs Electric Tankless Water Heaters
Tankless systems are available in both gas (natural gas or propane) and electric models, each with its own advantages.
Gas tankless water heaters tend to deliver higher flow rates because gas burners can heat water rapidly. This makes them a popular choice for larger homes or households with simultaneous demand (e.g., multiple bathrooms running at once). Gas units require proper venting to expel combustion gases, which means professional installation and adequate space for exhaust and air intake. In many regions, natural gas is less expensive per unit of energy than electricity, which makes gas units more economical to operate in the long term.
Electric tankless water heaters don’t require venting and have simpler installation requirements. They can be placed in more locations because they don’t need a gas supply or combustion air. However, electric models often have lower flow rates than equivalent gas units and may require upgraded electrical service (higher amperage breakers or dedicated circuits). These systems work well in smaller households, point-of-use applications, or areas where gas is unavailable or electricity is competitively priced.
Deciding between gas and electric often comes down to your home’s infrastructure, hot water demand, and local energy costs. A licensed plumber evaluates these factors and recommends the most cost-effective and reliable setup for your needs.
Installation Considerations and Best Practices
Tankless water heater installation is more complex than simply swapping out an old storage tank. It requires careful planning, proper venting (for gas units), and secure connections to water and fuel supplies. Because tankless systems heat water instantly, water pressure, gas line size (for gas units), and electrical capacity (for electric units) must all meet or exceed manufacturer specifications to ensure safety, performance, and longevity.
Gas units require proper venting to safely exhaust combustion byproducts. Depending on the model, this can involve PVC, stainless steel, or specialized vent piping. Electric units, while they don’t need venting, may demand significant electrical service upgrades. Homes with older electrical panels or limited capacity may require panel upgrades or dedicated circuits to accommodate high-power tankless electric systems.
Placement also matters. Unlike traditional tanks, which can be tucked away due to their size, tankless units are wall-mounted and require space around them for access, maintenance, and airflow. They’re typically installed near the point of highest use to reduce lag time, but plumbing and venting logistics can affect exact placement.
Professional installers also test for water hammer, crude pressure fluctuations that can occur when water flow stops suddenly. Addressing pressure issues during installation — with arrestors, regulators, or properly sized piping — prevents noise, stress on fittings, and premature wear.
Maintenance and Longevity
Once installed, tankless water heaters require periodic maintenance to deliver peak performance and prevent issues like mineral buildup. In areas with hard water — water with high mineral content — scale can accumulate in heat exchangers, reducing efficiency. Regular flushing with a descaling solution, typically once a year, helps keep mineral deposits under control and maintain efficiency.
In addition to flushing, manufacturers recommend cleaning filters and inspecting vents, burners (for gas units), and electrical connections for lint, debris, or corrosion. These maintenance tasks extend the unit’s lifespan, improve energy efficiency, and reduce the need for unexpected repairs. Without proper maintenance, warranties may be voided and performance compromised.
Compared to traditional tank systems, tankless units often have longer lifespans — up to twenty years or more with good care — and save money in the long run despite a higher initial cost. Annual maintenance from a qualified plumber more than pays for itself by extending service life and improving reliability.
Cost, Savings, and Return on Investment
While tankless water heaters usually cost more upfront than traditional tank models, they offer long-term savings that can offset the initial investment. Because they eliminate standby heat loss — the energy wasted keeping a large tank of water hot 24/7 — tankless systems are 30–50% more efficient than conventional tank heaters. Reduced energy use turns into lower utility bills.
The amount you save depends on your household’s hot water usage, local energy prices, and the efficiency of your system. In homes with high hot water demand, savings tend to be more pronounced because traditional tanks must constantly reheat water as it cools, leading to wasted energy.
Another financial benefit is the longer lifespan. Traditional tank heaters generally last eight to twelve years, while tankless systems often exceed fifteen to twenty years. Replacing a tankless unit less frequently reduces lifetime ownership costs.
It’s also worth considering rebates and incentives. Many utility companies and municipalities offer rebates for installing high-efficiency appliances, such as tankless water heaters. These incentives help reduce your out-of-pocket cost and improve your return on investment.
When a Tankless Water Heater Is Right for You
Tankless water heaters are fantastic for homeowners who want:
On-demand hot water without running out
Lower energy bills through improved efficiency
Space savings — tankless units are compact and wall-mounted
Longer service life compared to traditional storage tanks
Reduced risk of leaks and water damage from large storage tanks
They’re especially beneficial in homes with high hot water use or those planning renovations, upgrades, or moves away from old tank systems. However, if your home’s hot water use is minimal, if your electrical system isn’t easily upgradeable, or if upfront budget constraints are tight, a traditional tank or a hybrid system might be worth considering. A licensed plumbing professional helps you weigh these factors and assess the total cost of ownership.
Choosing a Tankless Water Heater
How do I know what size tankless water heater I need?
Sizing is based on peak hot water demand (GPM) and desired temperature rise. A plumber can calculate your household’s maximum flow needs and recommend a unit with adequate capacity.
Do tankless water heaters save money?
Yes. Because they heat water only when needed and eliminate standby heat loss, tankless units are more efficient and can reduce your utility bills over time.
Is maintenance required for tankless systems?
Yes. Annual flushing to remove mineral buildup and periodic filter cleaning help maintain efficiency and prolong the unit’s life.
Which is better — gas or electric tankless?
It depends on your home’s infrastructure, hot water demand, and energy costs. Gas models typically handle higher flow rates; electric models are simpler to install.
Can I install a tankless water heater myself?
No. Tankless installation involves plumbing, electrical work, and, for gas units, proper venting. A licensed plumber guarantees a safe, code-compliant installation.
Trust MNS Plumbing, a licensed and friendly plumber in the Phoenix area, for all your gas water heaters, electric water heaters, and gas line installation and repair needs.
