6 Best Tankless Water Heaters (2023 Guide)

As opposed to traditional tank water heaters that store a reserve of warm water, tankless water heaters heat incoming water as it passes through the unit.

In this review, our team compares the best tankless water heaters on the market, answers common questions, and provides expert-endorsed tips to help you find an energy-efficient unit that can deliver instant hot water throughout your home.

Top 6 Tankless Water Heaters

• Best Overall: Stiebel Eltron Electric Tankless Water Heater
• Best Whole-House: Rinnai Indoor Gas Tankless Hot Water Heater
• Best Propane-Powered: Rinnai Outdoor Gas Tankless Hot Water Heater
• Most Efficient: EcoSmart ECO 18 Electric Tankless Water Heater
• Best for Small Households: EcoSmart ECO 11 Electric Tankless Water Heater
• Best Value: Rheem Tankless Electric Water Heater

Best Tankless Water Heater Overall

Pros and Cons

✔ Outfitted with memory settings
✔ Provides silent operation
✔ Has an advanced flow control function that keeps water temperature consistent while it’s in use

✘ Has a hefty restocking fee
✘ Has a larger footprint than other electric models

What Customers Are Saying

We found that customers liked the longevity and reliability of this hot water heater. They said it worked in their home for over 10 years and dramatically reduced their energy bills. Unsatisfied customers that we saw said that the unit arrived defective and that they came across issues when they tried to return the product.

Best Whole-House Water Heater

Pros and Cons

✔ Built with enhanced scale detection to minimize long-term damage to the unit
✔ Can provide hot water to several appliances at once
✔ Equipped with a temperature lock that prevents accidental changes to water temperature

✘ Some customers said that the unit was difficult to install
✘ Most expensive option in this guide

What Customers Are Saying

When researching reviews for this product, we found that many customers who were pleased with their purchase said that the unit was easy to install, had a quiet operation, and helped save them money on their utility bills. However, we also saw some disappointed customers who said the item arrived damaged, with one customer noting that the unit was dented.

Best Propane-Powered Water Heater

Pros and Cons

✔ Lightweight for a gas model at 33 pounds
✔ Offers the option to use Wi-Fi technology for remote control
✔ Approved by the South Coast Air Quality Management District, which is responsible for regulating air pollution in California

✘ May not work with certain products, such as high-flow shower heads
✘ Doesn’t include a recess box to protect the unit from outdoor elements

What Customers Are Saying

Satisfied customers that we observed liked this product’s efficiency, ease of operation, temperature control, and savings. The product had limited negative reviews, though we did see one person say that they experienced issues with the flow switch.

Most Efficient Water Heater

Pros and Cons

✔ Can help you save 60% on water-heating costs
✔ Offers point-of-use installation to limit the amount of time it takes hot water to get to you
✔ Has a wall-mounted design to free up floor space

✘ Some customers experienced poor customer service
✘ Must hire a plumber or electrician to install it to validate the warranty

What Customers Are Saying

We noticed several customers who were pleased with their purchase said that the water heater was easy to install, reliable, and reasonably priced. Unsatisfied customers were disappointed with the manufacturer’s customer service, noting issues with utilizing the warranty.

Best Water Heater for Small Households

Pros and Cons

✔ Provides endless on-demand hot water at controlled flow rates
✔ Has a size that’s 90% smaller than traditional tank heaters
✔ Includes advanced self-modulating technology that only uses the precise amount of energy needed to heat the water

✘ The warranty doesn’t cover labor or accidental damages
✘ Can’t heat enough water for larger homes

What Customers Are Saying

We found that customers liked this water heater’s easy setup, consistent performance, and energy savings. Those we found that weren’t pleased with their purchase mentioned issues with the warranty not being honored and tech support not being helpful.

Best Value Tankless Water Heater

Pros and Cons

✔ Provides hot water on-demand
✔ Uses little electricity while saving homeowners on gas costs
✔ Doesn’t require any venting, allowing installation anywhere inside the home

✘ Some customers had longevity issues with their unit
✘ Has a limited capacity of only 8 kilowatts

What Customers Are Saying

Overall, most customers we reviewed said this tankless water heater was effective. They added that it quickly heated their water when needed and saved electricity by turning it off when hot water wasn’t needed. However, we did see some users complain about using the tankless water heater in a portable scenario, stating that the power cord necessary for the water heater was overly large.

Tankless Water Heater Buying Guide

Read our buying guide below to learn about important factors, such as power source and flow rate, to help you pick a tankless water heater.

Power Source

Tankless water heaters use electricity or gas for power. We measure the heating capacity of gas-powered water heaters in British thermal units (BTUs) and the heating capacity of electric water heaters in kilowatts (kW).

• Electric: In our experience, electric water heaters connect to your home’s electrical system. As water passes through the unit, a sensor in the heating element turns on the burner, and a thermostat starts working to get the water heated to your desired temperature. We found the cost of an electric water heater to be more affordable than a gas-powered one, but the unit is less efficient at heating the water that passes through it.
• Gas: Gas-powered water heaters are more efficient, allowing them to heat enough water to run several appliances at once. We’ve found that they can be split into non-condensing and condensing subcategories based on whether they have one or two heat exchangers.

Condensing vs. Non-Condensing Units

• Non-condensing: A non-condensing unit has one heat exchanger. The exhaust it produces is around 300 degrees Fahrenheit, meaning the unit wastes a lot of heat that could be used to warm more water. However, this type of gas heater is more affordable in our experience than its condensing counterpart. The unit and installation also cost less because you can use the same ventilation from your previous gas-powered tank-style water heater.
• Condensing: Condensing tankless water heaters have a second heating system that recirculates the hot exhaust produced by the first heating system to heat more water. While the initial cost of this water heater is more than a non-condensing unit, we find you end up saving money in the long run because of its low energy costs.

Water Flow Rate (GPM)

Tankless water heaters are rated by the number of gallons of hot water they can produce per minute, also known as their GPM. Electric water heaters have a lower flow rate than non-condensing gas heaters, which have a lower flow rate than condensing gas heaters.

When considering the flow rate you need, think about how many appliances you want to run at once and how much water those appliances require. For example, our team found that kitchen faucets require about 0.5 GPM, shower heads require 2.5 GPM, dishwashers require one GPM, and washing machines require 1.5 GPM. If you want to run your dishwasher while showering, your unit will need a flow rate of at least three GPM to keep up with your demand.

Indoor vs. Outdoor Water Heaters

Outdoor water heaters work well if you don’t have the space for one in your home or if you can’t install the ventilation needed for a gas-powered one. However, we don’t find them to be as efficient in the winter months because they’re directly exposed to cold temperatures, forcing them to work harder to heat the water running through them.

Tankless Water Heater Installation

Electric water heaters are easier to install than gas ones. Because of their small size, they can be placed in more areas than gas-powered water heaters. Once you’ve chosen a spot, connect the water heater to your electrical system and water pipes. If you install a gas-powered water heater inside, know that it will require ventilation to ensure the by-products produced by the burning gas don’t remain in your home and poison your family. Not only does this increase the water heater installation cost and time, but it also limits where you can put the unit because you have to have space for the unit, vents, and ducts.

For more information on how to install a tankless water heater, check out the video below.

Maintenance and Warranty

Depending on the model and type of tankless water heater you choose, we recommend that it be maintained by a professional once or twice a year. Due to the mineral content (“hard” water) in many local water supplies, a professional may need to descale or de-lime your tankless water heater. Additionally, you may need a professional technician to install your new tankless water heater to validate the manufacturer’s warranty.

Tips for Using a Tankless Water Heater

Once you’ve chosen the best tankless water heater for your needs, the next step is to learn how to use it properly to get the best results. When operating a tankless water heater, keep these tips in mind to ensure you’re getting the most bang for your buck.

Read the Manual

Familiarize yourself with the manufacturer’s instructions and safety guidelines provided in the user manual. Each tankless water heater model may have specific requirements and recommendations.

Be Mindful of Ventilation 

Tankless water heaters need to be properly ventilated to work effectively. Tankless water heaters generate exhaust gases, so it’s important to vent them to the outside of your home to prevent the buildup of harmful gases like carbon monoxide.

Be Careful with the Temperature

Take care when adjusting the temperature settings of your tankless water heater. Higher temperatures can scald or burn, especially for children or the elderly. Set the water temperature to a safe and comfortable level.

Monitor the Water Pressure

Tankless water heaters require adequate water pressure to function properly. Excessively high water pressure can damage the unit, while low water pressure may result in insufficient hot water. Consider installing a pressure regulator if necessary.

Keep the Area Clear

Avoid storing flammable materials, chemicals, or combustible items near the tankless water heater. Maintain a clear area around the unit for proper airflow and easy access.

Frequently Asked Questions About Tankless Water Heaters

Will I save money with a tankless water heater?

Yes, over time you can save money with a tankless water heater due to its increased efficiency. While the cost of a tankless unit is more expensive than the cost of a tank-style unit, you’ll save money in the long run because it’s more efficient at heating water.

How long will it take my tankless water heater to heat my water?

Most tankless water heaters heat your water within seconds, in our team’s testing experience. The short lag you may experience is likely due to how far away the heater is from the tap.

Will my tankless water heater still work if the power goes out?

Since gas water heaters aren’t connected to your electrical system, they’ll still work if you experience a power outage. Electric heaters will still allow water to flow through them, but their heating element won’t work unless you have a battery backup.

What are the drawbacks of a tankless water heater?

The drawbacks of tankless water heaters we found typically include a longer wait time for hot water, high upfront installation costs, and difficulty achieving a lukewarm temperature. Additionally, electric tankless water heaters may not work during a power outage.

How We Selected the Best Tankless Water Heaters

To provide our readers with the best tankless water heater recommendations possible, we rely on several key sources of information to help guide our selection process.

Initial Research: Our research process began by generating a list of water heaters with a significant number of verified-buyer reviews and an average customer review rating of 4–5 stars. We looked at positive and negative reviews alike, focusing on information from both satisfied and critical buyers. 

Expert Insights: Through our years of experience, we’ve learned that listening to what others have to say is key to building accurate, well-rounded articles. To complement our in-house expertise, our team looked at reviews and videos from trusted publications and independent testers, spoke with subject matter experts, and drew insights from reader contributions.

Final Product Selection: We then began fine-tuning our list by replacing older models with the latest versions and eliminating any discontinued models. From there, we pared the list down further by comparing each model’s feature set and selecting the best-in-class options for a variety of buyers, budgets, and scenarios.

Questions or Comments?

To share feedback or ask a question about this article, send a note to our Reviews Team at reviews@thisoldhousereviews.com.