How Much Does a Tankless Water Heater Cost?

Tankless water heater costs depend on your home's heating needs, but typically range from $1,171 to $3,331, with the national average being $2,216.

Tankless Water Heater Cost

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  • Typical Range: $1,171 to $3,331
  • National Average: $2,216

If you’re tired of running out of hot water, a tankless water heater may be the solution—it will heat water as you need it. According to HomeAdvisor, tankless water heater costs range from $1,171 to $3,331, with the national average at $2,216. The overall cost of installing a tankless water heater varies depending on the type, brand, and flow rate. When a tankless water heater is installed and connected correctly, it can potentially save money in the long run compared to a traditional tank-style water heater. Sometimes called on-demand water heaters, tankless hot water heaters have some advantages over tank-style heaters. Tankless heaters use energy to heat water only when you open a tap or use an appliance. They can produce an endless supply of hot water, have a lower risk of leaks, take up less space, and usually have a longer lifespan.

When you hire a professional to install a tankless water heater, expect to pay a plumber either a flat rate for labor or an hourly fee. Some plumbers charge between $45 and $150 per hour to install and connect a tankless water heater. The ultimate costs for labor usually average between $100 and $450.

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Factors in Calculating Tankless Water Heater Cost  

Calculating tankless water heater cost depends on several factors. Prices can differ from the national average due to the type of system, whether it’s a single-point or a whole-house system, the type of fuel it uses, the flow rate, system size, brand, labor, materials, permits, accessibility, and additional charges for the removal of the existing heating system.

Type of System 

The total cost for installing a tankless water heater depends on the type of heater. A high-end gas model can cost upward of $1,500, and a single-point electric model averages around $150. Electric, natural gas, propane, or solar power can fuel tankless water heaters. Each type has its price point and advantages.

Tankless Water Heater Cost

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Single-Point vs. Whole-House System

A point-of-use or single-point tankless water heater system is placed by the faucet, appliance, or shower that needs it. These are easy for a professional to install and cost between $100 to $300 each. They are efficient since the water has a short distance to travel, so less water is wasted. Single-point systems are standard in homes with multiple bathrooms and appliances. These water heater systems can be installed inside or outside the house and no more than 50 feet away from an adjoining power source using an electric heater. This requires a separate water heater for each water source. A single-point unit produces from 0.5 to 2 gallons of hot water per minute.

A whole-house system can cost between $450 and $1,500. A whole-house tankless water heater is typically installed near an exterior wall for proper venting for gas units. One whole-house system can provide hot water for multiple appliances and bathrooms even when they’re being used simultaneously. There are differently-sized units so you can choose the right size for your home. A whole-house system produces between 5 and 10 gallons of hot water per minute. Knowing how much hot water your household regularly uses will help you decide on the type of tankless water heater to purchase. Some houses may need multiple whole-house units if several people are showering, doing laundry, and running the dishwasher simultaneously. Some homeowners decide on a whole-house tankless system with a few single-point units for specific rooms. Talk to your tankless water heater professional for advice on the best system for your home.

Fuel Type and Flow Rate

Tankless water heaters can be fueled in various ways. They can run on natural gas, propane, electricity, oil, or solar power. Some homeowners prefer to use a tankless water heater that runs on the same fuel source as the home’s heat. Some water heaters can use a combination of fuel sources, like an electric heater with a propane furnace. A solar-powered unit can help reduce energy bills but will cost more up front to install.

Tankless water heaters don’t specify how many gallons of water they supply as a tank-style heater would. Tankless heaters are sized by a flow rate. Flow rate is determined by measuring how many gallons per minute (GPM) are needed. To calculate the GPM needed for your home, look at what fixtures and appliances are used simultaneously and add those numbers together to determine the maximum gallons per minute necessary. Here are some of the most common flow rates.

  • Kitchen sink: 3.0 to 9.0 GPM
  • Dishwasher: 1.0 to 2.5 GPM
  • Bathroom sink: 0.5 to 1.5 GPM
  • Shower: 1.0 to 2.0 GPM
  • Washing machine: 1.5 to 3.0 GPM

System Size 

Different-sized tankless water heater systems will have varying prices. Another factor that will impact the cost will be if the heater is a budget brand or energy efficient. A larger electric heater unit is typically less expensive than a smaller gas-powered one.

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Brand

There are many brands to choose from when buying a tankless water heater. Some will be more budget-friendly, while others will be more expensive. It’s recommended that homeowners consider all the options for a tankless system and not just the overall cost.

Labor, Materials, and Permits

When plumbers install tankless water heaters, they typically charge between $45 and $150 per hour, depending on the location. It usually takes between 2 and 8 hours to install a tankless water heater, based on water heater type, fuel source, and location. Installation typically involves opening up walls, which will add to the overall cost of the project. There may be additional fees of approximately $200 added for repairs and paint. To install an access door for repairs, a carpenter will charge roughly $70 per hour, or a handyman will charge between $100 and $300 to do the job. Additional costs for ventilation and insulation may accrue if you live in a colder climate. This can add up to $400 to the overall project cost. Fuel type can also affect cost since fuel lines will need to be run to the heater.

Some materials that are needed for a tankless water heater installation include a gas connector kit at $20 to $35, a termination vent kit at $40 to $100, fittings and mounting hardware for between $10 and $30, a two-piece lead-free brass valve set at $60 to $110, and piping and insulation at an average of $10 per foot.

Depending on the building codes in your area, you may need a permit to have a tankless water heating system installed in your home. Some areas consider a water heater replacement and a new water heating system as two different jobs. One may require a permit while the other may not. A professional plumber would know the difference and whether your installation project needs a permit. Propane-powered heating systems typically require that the installation is handled by an insured and licensed professional.

Accessibility

If the existing water heater is difficult to access, prepare to pay more for its removal and to  install a new one. The prices will depend on your exact home and situation.

Removal of Current Heating System

The removal of the current water heating system can cost $500 or more, depending on the size of the unit, the accessibility, and the hourly rate of your contractor. When shopping around for installation estimates, be sure that the price quote includes the removal and disposal of your current water heater.

Tankless Water Heater Cost

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Additional Costs and Considerations

There will be additional price factors and considerations beyond the basics when budgeting for tankless water heater costs. These can include electrical work, insulation, gas line installation, structural modifications, whether the unit uses a power vent or a direct vent, and condensing versus non-condensing tankless water heater models.

Electrical Updates

If you decide on an electric tankless water heater, some electrical designs and systems need to be updated to aid with the voltage requirements of the new water heater.

Insulation

Some tankless water heaters cannot be installed in the same location and configuration as a tank-style heater. A plumber and electrician may have to design a new setup with additional materials like piping and insulation, which can cost $10 per foot. If you live in a cold climate, the water pipes will need to be insulated. Plumbers typically charge $45 to $150 per hour to insulate or modify pipes.

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Gas Line Installation

Tankless gas water heaters require more time and effort to install. The gas line that runs to the tankless heater needs to be fitted specially to the heater. If there isn’t an existing gas line or an offshoot where the water heater will be installed, a gas line will need to be run. This can increase the project cost by up to $800. Keep in mind that tankless gas water heaters have restrictions on where they can be installed, especially if they need to be vented to the outside.

Structural Modifications

Some homes may need structural modifications when a tankless water heater is being installed. Older homes may require a permit for building a cabinet for a tankless heater, but be sure to ask your contractor if structural considerations are included in a plumbing or electrical permit.

Power Vent vs. Direct Vent

Whether they’re natural gas or propane, all tankless gas water heaters need to be vented to the outside. They can be vented in two ways: with a power vent or direct vent. A power vent draws indoor air surrounding the water heater and utilizes an electric blower or fan to vent the exhaust through a horizontal or vertical duct. A direct vent brings in air from the outside through a duct and exhausts through a different chamber or duct within the same duct. Small and enclosed spaces work well for a direct vent. Tankless water heaters can be vented via the roof or an exterior side wall.

Condensing vs. Non-Condensing

Tankless water heaters are available in condensing and non-condensing varieties. Condensing tankless units have a second heat exchanger that traps the extra heat before it exits to the venting system and uses it to heat the water. This increases the energy efficiency of the water heater to 90 percent or more. Non-condensing tankless water heaters utilize a single heat exchanger and vent the exhaust heat to the outside. These types of water heaters have an energy efficiency rate of 80 percent.

Tankless Water Heater Cost

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Tankless Water Heater Cost: Types of Tankless Water Heaters

Tankless water heater cost can vary depending on the type of water heater that’s installed. A natural gas or propane heater will cost more in upfront costs but will save money down the road. Electric water heaters are cheaper to install, but the cost of running them over the appliance’s life depends on the local cost of electricity. A solar-powered water heater is one of the most expensive heaters to install, but they will save money in the long run by using a renewable power source.

Natural Gas or Propane

Natural gas or propane tankless water heaters cost between $1,000 and $1,500 to install. Natural gas water heaters are a popular choice and work well in cold climates. These heaters rely on a utility supply line, and the average cost to run a natural gas heater is approximately $200 per year. Tankless gas water heaters can supply about 15 to 20 GPM—more than electric heaters. Gas heaters are ideal for larger households, those who live in colder climates, and those with above-average use of hot water.

Propane is considered a more efficient fuel than natural gas. It costs $350 per year to run a propane tankless water heater, so it’s slightly more expensive than a natural gas heater. Propane heaters are an excellent option for those who do not have access to a natural gas line or for those who have expensive electricity prices. Propane is typically more expensive than natural gas but more budget-friendly than an electric or oil-powered water heater.

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Electric 

Electric tankless water heaters are less expensive to install than natural gas or propane heaters. They typically run between $800 and $1,500 to install, and since there is no need to vent to the outside, the installation is not as complicated. Electric heaters are easier to maintain, have high energy ratings, and perform well. A tankless electric water heater is more energy efficient than a tank-style heater by 20 to 30 percent. This type of tankless water heater is very popular with homeowners. It’s environmentally friendly since it only needs electricity to run and requires minimal maintenance, but it’s rare to find an electric heater with outputs of more than 7 or 8 GPM. If you have above-average hot water usage and want to have an electric heater, it may be recommended that you opt for a tank-style heater instead. If you have decided on a tankless option, a different fuel source may work better for your household. If you’re converting from a natural gas heater, you may need to hire an electrician on top of a plumber for $50 to $100 per hour.

Electric hybrid water heaters cost more up front but heat water much faster than a standard model. While they’re technically not a tankless water heater, they have some of the same features: They are economical, and they don’t require venting to the outside. The hybrid models are only available up to 8,700 BTUs.

Point-of-use electric water heaters cost between $100 and $300 each. These are popular since they’re easy to install, and they’re an affordable option for most homeowners. They’re convenient to use in small areas, under sinks, and next to washing machines. Point-of-use electric heaters are also a good option for those with boats, campers, or small bathrooms. They save water by heating it quickly with minimal waste. They are lightweight, insulated, and noncorrosive.

Solar 

The average cost for a solar tankless water heater is $1,700 to $5,000, but the cost can skyrocket as high as $13,000. A solar water heater qualifies for a 30 percent tax credit, and studies have shown that they reduce water heating  expenses by 50 to 80 percent. These types of water heaters are recommended in sunny locations. They’re easy to maintain and operate quietly, but the installation and repairs are costly. Once the solar water heater is up and running, they don’t have any energy costs since they run on the sun’s power. This will pay for the heater over time.

Tankless Water Heater Cost

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Benefits of a Tankless Water Heater

Converting from a standard tank-style water heater to a tankless version is a beneficial upgrade to any home. Tankless-style water heaters typically last longer than their tank-style counterparts, use less energy, provide an endless supply of hot water, and reduce utility bills.

Space Saving 

Traditional tank-style water heaters hold approximately 40 to 60 gallons of water. They typically measure 60 inches tall by 24 inches wide and take up considerably more space than a tankless version. The standard size for a tankless water heater is 28 inches tall by 20 inches wide by 10 inches deep. Tankless heaters are usually installed inside the wall or in a cabinet. This can free up space in your basement or utility closet.

Safe to Use

If a tank-style water heater fails, it can potentially leak or spill dozens of gallons of water in your home. There’s no risk of that with a tankless water heater. Tankless heaters also do not promote bacteria growth, and they will not topple over in an earthquake or other natural disaster. Since the air supply to the heater and the vents to the outside are sealed, there is no risk of harmful carbon monoxide exhaust backing up into the house.

Easy to Winterize

Suppose you own a seasonal home or a vacation rental. In that case, you know how time-consuming and difficult it can be to drain a traditional tank-style water heater before closing the house up for an extended period. A tankless water heater can be drained in seconds with a compressor, then simply unplugged.

Efficient

Condensing tankless water heaters can use up to 96 percent of the fuel’s heat and reuse it. This is because the second heat exchanger traps the exhaust heat before it’s expelled out of the vent. Condensing tankless heaters are about 25 percent more expensive than their non-condensing counterparts. Furthermore, they create an acidic condensate that will need to be offset and neutralized. If the heater doesn’t come with a built-in neutralizer, a water heater professional will need to install one.

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Energy Saving

The energy savings with tankless water heaters are much more significant compared with traditional tank-style heaters. Water heating makes up approximately 30 percent of a home’s energy bills. A tankless water heater can save up to 50 percent, which adds up to $80 to $100 per year. Since tankless water heaters only heat water as it’s needed, it can significantly reduce energy use.

Long Lasting

Gas-powered tankless water heaters can last for 20 years or more. They last longer and require less maintenance than tank-style water heaters since they do not store water in a tank at risk of corrosion and leaks.

Easy to Maintain

Tankless water heaters are easy to maintain, but there may be more work involved if you have hard water. The minerals in hard water can cause buildup and lead to clogged pipes. It’s recommended to do a yearly descaling even in homes without hard water. If the water temperature is kept hotter than average, it’s recommended to descale every 6 months. The Department of Energy suggests periodic maintenance as proposed by the manufacturer. Hourly plumber fees average between $45 and $200 for tankless water heater maintenance, with most jobs taking between 1 and 2 hours.

Consistent Supply of Hot Water

When the entire supply of a home’s hot water is stored in a tank, the possibility of running out of hot water at an inopportune moment is likely. Tankless water heaters heat water as it’s needed for as long as it’s needed. This results in an endless supply of hot water on demand.

Tankless Water Heater Cost

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What Size Tankless Water Heater Do I Need? 

Once you decide on the type of tankless water heater, the next important decision is the size of the water heater. If the water heater is too large, you’ll pay for a unit that you won’t get full use from. If it’s too small, you risk not having hot water when you need it. A single-point system will be required at every faucet and appliance that uses hot water. A whole-house system will need to have enough BTUs to quickly heat the water as you need it. To know what size tankless water heater you need, a professional will look into three items to determine the size:

  • Incoming water temperature. A plumber will examine the temperature of the water coming into the house and determine how many BTUs it will take to turn cold water into 120-degree Fahrenheit water.
    Demand. A plumber will also be able to determine the peak demand by examining the sum of the flow rates of all the fixtures and appliances used at the same time that use hot water. The total sum is reduced by 20 percent since we don’t shower or bathe in
  • 120-degree Fahrenheit water. Peak demand can be reduced by using low-flow fixtures or not using multiple appliances and fixtures simultaneously.
  • BTU output. The total BTU output is determined by calculating the peak demand figures and the BTUs per gallon. If the total is between two types of water heaters, go with the one that has a higher BTU rating. If your home’s output exceeds the maximum 198,000 BTUs for residential water heaters, it’s recommended that you go with two smaller tankless water heaters that will work in tandem.

Tankless Water Heater Cost: DIY vs. Hiring a Professional 

Installing a tankless water heater is not a project for the average DIYer. Many homes will need modifications to accommodate a new tankless water heater. These can include new electrical wiring, new gas lines, pipes, fittings, or drywall. Some locations require that this work be done by a trained and licensed professional. Some codes involve carbon monoxide emissions, venting, thermal resistance, and location-specific regulations for earthquakes in California. To ensure that your new tankless water heater is installed correctly, hire an experienced plumber so all of the requirements and codes are met for your locality.

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How to Save Money on a Tankless Water Heater 

Tankless water heater costs can be high, and the additional costs associated with the project can quickly add up. One way to save on tankless water heater costs is to install the cheapest water heater, but there are other ways to save without compromising quality.

  • Rebates. Condensing tankless water heaters are more energy efficient than traditional options, and they’re certified by the federal Energy Star program and qualify for rebates. The rebate amount is typically enough to make up the price difference between a condensing unit and a non-condensing one. Ask your water heater professional about manufacturer rebates.
  • Tax credits. The government offers a 30 percent tax credit if you opt for a solar-powered tankless water heater.
    Get multiple estimates. Get at least three estimates from reputable plumbers in your area to compare installation costs.
  • Fuel type. Deciding on a natural gas, propane, or solar-powered water heater will affect the project’s overall price. Some fuel types are more expensive up front but will save more money down the road. Consider the options and choose the type of tankless water heater that will work the best in your home.
Tankless Water Heater Cost

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Questions to Ask About Tankless Water Heaters

Asking a professional the right questions about tankless water heater costs can minimize miscommunication, save money, and get the desired results. Here are some questions to ask a tankless water heater professional.

  • Are you licensed and insured?
  • Who will install the tankless water heater?
  • What size tank do I need?
  • What brands of tankless water heaters can I choose from?
  • How long will the installation take?
  • How will you remove and dispose of the current water heater?
  • Do I need to schedule maintenance appointments?
  • What type of warranty do you offer?

FAQs

Deciding on a tankless water heater while staying within your budget can be a daunting process. Here are some frequently asked questions about tankless water heater costs to help guide you in your decisions.

Q. Can I run out of hot water with a tankless water heater?

A tankless water heater will heat water on demand so you have enough hot water to supply your home when you need it.

Q. What is the main downside of a tankless water heater?

Some cons of a tankless water heater are that the up front costs are higher than a tank-style water heater. It can take up to 20 years to see the savings of a tankless heater, and they can supply inconsistent water temperatures if an incorrect size is installed in your home. Probably the biggest downside is that a tankless system does not provide hot water during a power outage.

Q. How long will my new tankless water heater last? 

On average, the lifespan of a tankless water heater is approximately 20 years with proper maintenance.

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