How much does a tankless water heater cost installed?

Electric point-of-use tankless units cost $700-$1,500 installed. Electric whole-house units cost $1,000-$2,500. Gas whole-house tankless water heaters cost $2,500-$5,000 installed. Premium condensing gas units cost $3,000-$6,000. The installation is often more expensive than the unit itself due to gas line upgrades, venting, or electrical panel upgrades. Replacing an existing tank with tankless typically costs $1,000-$2,500 for installation labor alone. What size tankless water heater do I need?

What size tankless water heater do I need?

Size based on simultaneous hot water demand in gallons per minute (GPM). Add up fixtures that may run at the same time: shower (2.0 GPM), faucet (1.0 GPM), dishwasher (1.5 GPM). A 2-bathroom home typically needs 8-10 GPM (gas unit). Factor in your incoming water temperature — northern states need larger units because the water starts colder (35-45°F vs 55-70°F in the south). Gas units provide 8-11 GPM; electric units provide 2-5 GPM. Is a tankless water heater worth it?

Is a tankless water heater worth it?

For most homeowners, yes. Tankless units last 20+ years (vs 8-12 for tank), use 24-34% less energy, and never run out of hot water. They save $100-$150/year on energy bills. The higher upfront cost ($2,500-$5,000 vs $800-$1,500 for tank) pays back in 5-10 years through energy savings and avoided tank replacement. Tankless is especially worth it if you plan to stay in your home long-term, have high hot water demand, or want to reclaim the space a tank occupies. Gas or electric tankless — which is better?

Gas or electric tankless — which is better?

Gas is better for whole-house applications in most climates. Gas units produce 8-11 GPM (enough for 2-3 simultaneous showers) while electric units produce only 2-5 GPM. Electric is better for point-of-use applications (single sink or shower) or warm climates where incoming water temperature is already 60-70°F. Electric is cheaper to install (no venting needed) but may require an electrical panel upgrade. In cold climates, gas is the only viable whole-house option.

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Comparisons

Tankless Water Heater Guide: Cost, Sizing, Gas vs Electric & Installation

Lumberama Editorial Team, Plumbing & Home Systems Specialists Jun 2, 2026 9 min read

How They Work

On-demand heating: Water flows through a heat exchanger when a tap opens. No storage tank — heats water only when needed. Burner or electric element activates instantly. Hot water in 10-15 seconds (plus pipe travel time). Never runs out of hot water (within capacity).

Flow rate (GPM): Measured in gallons per minute. Each fixture has a flow rate: shower 2.0 GPM, faucet 1.0 GPM, dishwasher 1.5 GPM, washing machine 2.0 GPM. Unit must handle simultaneous demand. Temperature rise: incoming water temp to desired output (typically 77°F rise).

Activation threshold: Minimum flow rate to activate burner (typically 0.4-0.5 GPM). Low-flow fixtures may not trigger unit. This is the most common complaint with tankless systems.

Gas vs Electric

Gas tankless: Higher output: 8-11 GPM (whole-house capable). Requires gas line (3/4 inch minimum, often 1 inch). Requires venting (direct vent or power vent). Can handle 2-3 simultaneous showers. Cost: $1,000-$2,500 (unit only). Best for: whole-house applications. Brands: Rinnai, Navien, Noritz, Rheem.

Electric tankless: Lower output: 2-5 GPM (point-of-use or warm climates). No venting required. Requires high-amperage electrical (150-200 amp panel). May need electrical panel upgrade. Cost: $200-$800 (unit only). Best for: point-of-use (single fixture) or warm climates. Brands: Stiebel Eltron, EcoSmart, Rheem.

Key difference: Gas handles whole-house in cold climates. Electric works for whole-house only in warm climates (incoming water already 60-70°F). In cold climates (40°F incoming), electric units cannot produce enough GPM for whole-house use.

Sizing

Step 1 — Determine demand: List all fixtures that may run simultaneously. Add their GPM: 2 showers (2.0 each) + 1 faucet (1.0) = 5.0 GPM. This is your peak demand.

Step 2 — Temperature rise: Incoming water temp varies by region: North: 35-45°F, South: 55-70°F, Average: 50°F. Desired output: 120°F. Temperature rise = 120 - incoming temp. Northern states: 75-85°F rise. Southern states: 50-65°F rise.

Step 3 — Match unit: Gas units: 8-11 GPM at 77°F rise. Electric units: 2-5 GPM at 77°F rise. Choose a unit that meets your GPM at your temperature rise. Oversize by 10-20% for comfort margin.

Common sizing: 1 bathroom home: gas 6-8 GPM or electric 3-4 GPM. 2 bathroom home: gas 8-10 GPM. 3+ bathroom home: gas 10-11 GPM or two units. Large home: two units in parallel or multiple point-of-use.

Cost

Unit cost: Electric point-of-use: $200-$500. Electric whole-house: $500-$800. Gas mid-range: $1,000-$1,500. Gas premium (condensing): $1,500-$2,500.

Installation cost: Electric (simple): $500-$1,500. Gas (new install): $1,500-$3,500. Gas (replacing tank): $1,000-$2,500. Gas line upgrade: $500-$1,500 (if needed). Electrical panel upgrade: $1,500-$3,000 (if needed for electric). Venting installation: $500-$1,000 (gas units).

Total installed: Electric point-of-use: $700-$1,500. Electric whole-house: $1,000-$2,500. Gas whole-house: $2,500-$5,000. Gas condensing whole-house: $3,000-$6,000.

Operating cost savings: Tankless uses 24-34% less energy than tank (DOE). Saves $100-$150/year on energy bills. Gas tankless: $200-$300/year operating cost. Tank water heater: $350-$500/year operating cost. Payback period: 5-10 years.

Pros and Cons

Pros: Endless hot water (within flow rate capacity). 20+ year lifespan (vs 8-12 years for tank). 24-34% more energy efficient. Space saving (wall-mounted, size of a suitcase). No risk of tank flooding or leaking. Higher resale value for home.

Cons: Higher upfront cost ($2,500-$5,000 vs $800-$1,500 for tank). Cold water sandwich (brief cold burst between uses). Minimum flow rate required to activate. Annual descaling maintenance recommended (especially hard water areas). May need gas line or electrical panel upgrade. Multiple simultaneous high-demand uses can exceed capacity.

Maintenance: Annual flushing/descaling with vinegar (especially hard water). Isolation valves make flushing easy ($50-$100 to add). Professional flush: $100-$200/year. Air filter cleaning: every 6 months. Water filter: replace annually if installed.