How much does a tankless water heater cost?

Gas unit: $1,000-$3,000. Electric unit: $200-$800. Professional installation (gas): $1,500-$3,500. Professional installation (electric): $500-$1,500. Total installed (gas): $2,500-$6,000. Total installed (electric): $700-$2,000. The higher installation cost for gas is due to: gas line sizing (may need an upgrade from 1/2 to 3/4 inch), venting (stainless steel vent through the wall), and condensate drain (for condensing models). If replacing a tank water heater: the gas line and venting modifications add $500-$1,500 to the project.

Are tankless water heaters worth it?

For most homeowners: yes. Benefits: endless hot water (never runs out), energy savings ($75-$200/year for gas), longer lifespan (20+ years vs. 10-15 for tank), and space savings (wall-mounted, frees up floor space). Drawbacks: higher upfront cost (2-3x a tank water heater), potential for cold water sandwich (brief burst of cold water between hot water draws), and limited flow rate (cannot supply as many simultaneous fixtures as a large tank in cold climates). Best candidates: homes with natural gas, moderate-to-high hot water usage, and 1-3 bathrooms. Less ideal: homes with very high simultaneous hot water demand (4+ bathrooms running at once) or cold climates with electric-only service.

Gas or electric tankless?

Gas is better for: whole-house applications, cold climates (higher flow rates at higher temperature rises), homes with existing natural gas, and households with high simultaneous demand. Electric is better for: point-of-use applications (single fixture), warm climates (less temperature rise needed), homes without gas service, and smaller households with lower simultaneous demand. Gas advantages: higher flow rate (8-11 GPM vs. 2-5 GPM), works in cold climates. Electric advantages: lower cost, no venting, easier installation, no combustion byproducts, higher efficiency (99% vs. 80-98% for gas). For most homes: gas tankless is the better whole-house solution.

How long do tankless water heaters last?

Gas tankless: 20+ years with proper maintenance. Electric tankless: 20-30 years (fewer moving parts). Compared to tank water heaters: 10-15 years. Maintenance: descaling (flushing with vinegar) every 1-2 years in hard water areas. The heat exchanger is the most expensive component — it can be replaced without replacing the entire unit ($500-$1,500). Many manufacturers offer 10-15 year warranties on the heat exchanger. Key to longevity: annual or biannual descaling (hard water scale is the number one cause of premature failure).

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Home Improvement

Tankless Water Heater Guide: Types, Sizing & Cost

Lumberama Editorial Team, Plumbing & Water Heating Specialists Jul 23, 2026 12 min read

How Tankless Water Heaters Work

A tankless (on-demand) water heater heats water only when you turn on a hot water faucet. Cold water flows through the unit, a gas burner or electric element heats it instantly, and hot water flows out. There is no storage tank (no 40-80 gallons of water sitting around being kept hot 24/7). The result: endless hot water (it never runs out because there is no tank to deplete) and energy savings (no standby heat loss from keeping a tank of water hot).

Types

Gas (natural gas or propane): Higher flow rate (typically 8-11 GPM for whole-house models). Can supply multiple fixtures simultaneously. Requires gas line, venting (direct vent or power vent through the wall or roof), and condensate drain (for condensing models). Most popular for whole-house applications. Brands: Rinnai, Navien, Noritz, Rheem. Cost: $1,000-$3,000 (unit only).

Electric: Lower flow rate (typically 2-5 GPM for whole-house models). No venting required. Smaller and easier to install. Requires significant electrical capacity (150-200 amp service, dedicated circuits). Better suited for warm climates (where incoming water temperature is higher) or point-of-use applications (a single bathroom or kitchen). Brands: Stiebel Eltron, EcoSmart, Rheem. Cost: $200-$800 (unit only).

Point-of-use: Small electric units installed near a single fixture (under the sink, in a bathroom). Flow rate: 0.5-2 GPM. Provides instant hot water at that fixture (eliminates the wait for hot water to travel from a distant water heater). Cost: $150-$400 (installed).

Sizing

Sizing is based on two factors: flow rate (GPM) and temperature rise. Flow rate: add up the GPM of all fixtures you want to run simultaneously. A shower is 2-2.5 GPM, a kitchen faucet is 1.5 GPM, a dishwasher is 1-1.5 GPM. If you want to run 2 showers and a kitchen faucet simultaneously: 2.5 + 2.5 + 1.5 = 6.5 GPM needed. Temperature rise: the difference between incoming cold water temperature and your desired hot water temperature (typically 120F). In cold climates (incoming water 40F): temperature rise = 80F. In warm climates (incoming water 70F): temperature rise = 50F. A unit's GPM rating is based on a specific temperature rise — a unit rated at 9 GPM at 35F rise may only deliver 5 GPM at 70F rise. For cold climates: size up. For most 2-3 bathroom homes: a gas unit rated at 8-10 GPM (at 35F rise) or an equivalent electric unit.