Which Type of Water Heater Is Best for Your Home?

When it comes time to replace your home’s water heater, you’ll have hundreds of models from which to choose. To make the right decision for your family, learn the basics of the different types of water heaters available today.

By Tony Carrick and Michael Franco and Bob Vila | Updated Oct 27, 2021 11:40 PM

Types of Water Heaters - Maintenance

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The water heater is the home’s unsung hero, reliably operating behind the scenes to make possible many of the modern conveniences we take for granted—hot showers, washing machines, dishwashers, and more.

If your existing water heater has outlived its useful life and it’s time to replace it, consider the virtues of a high-efficiency model, typically designated by an Energy Star rating. Not only does an efficient water heater conserve H20  and is better for the environment, but it also saves energy so it’s good for your wallet.

While installation is best left to the professionals, one job that you can do yourself is choosing among the different water heater options on the market. There have never been more hot water heater options for a homeowner to consider. But if you reflect on your needs, determine how much you wish to spend, and weigh your level of commitment to energy efficiency, you should have no trouble choosing the right model for your home and family.

When To Replace Your Water Heater

Water heaters are rarely fine one day and then deceased the next. There are usually warning signs that a water heater is on its last legs. The following are some of the most common signals that it’s nearing the end of its life.

  • No hot water. Few things grab the attention of a homeowner more than a cold shower. Water that’s lukewarm is a surefire sign that the hot water heater is at the end of its life.
  • Cloudy water or rusty water. The anode rod inside of your water heater is responsible for preventing the inside from rusting. Once that anode wears out, the inside of the water heater will rust, indicating that the end is indeed near.
  • Rumbling or popping. No, those noises emanating from the basement aren’t from a monster lurking in the darkness. It’s a sign of something much worse–a dying water heater. As a hot water heater ages, minerals from hard water begin to build up inside of the tank, creating air pockets in the hot water that create popping noises as the air is released.
  • Leaking. A mysterious pool of water near the hot water heater is a clear sign that cracks and fissures have formed in the tank, causing it to spring a leak. Since a leaking hot water heater can flood a basement, schedule to replace it immediately.
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Water Heater Features To Consider Before Purchase

There are a lot of different types of water heaters on the market, so it’s important to figure out the features that matter most to you. To make it easier to wade through the options, consider the following when shopping for a water heater.

  • Fuel. Before considering which type of water heater to purchase, know what fuel sources you have as an option. Tank and tankless water heaters use either a gas-powered flame or electric coil to heat water. Solar heaters use the heat of the sun to warm the water, while heat pump water heaters use an electric compressor to pull heat from the surrounding air.
  • Size. Regardless of type, hot water heaters come in different sizes. To determine the right size, consider how many people will be using hot water. For example, a tankless hot water heater that can deliver 7 gallons of hot water per minute or a storage tank heater that has a 50-gallon capacity is usually a good fit for a family of four.
  • Energy efficiency. Energy efficiency refers to how much electricity or gas a water heater uses to warm water. All major appliances, including hot water heaters, have labels that provide the unit’s energy efficiency. Depending on the model, an Energy Star water heater can save up to 50 percent in annual energy use.
  • Costs. A hot water heater’s energy efficiency determines how much it will cost to run. A standard tank electric water heater costs about $450 a year to operate, while a gas water heater typically costs about $250. Tankless water heaters typically save homeowners about $108 a year in operating costs, according to the U.S. Department of Energy.

Conventional Storage Water Heater

The most common type of water heater is a conventional storage water heater. It includes an insulated storage tank that holds a quantity of heated water, anywhere between 30 and 80 gallons.

What powers the appliance depends largely on the services already present in your home. Any of the usual suspects—natural gas, liquid propane, oil, or electricity—can be the fuel source for this type of water heater.

Inside the tank, a gauge shows the temperature of the water. When it drops below a preset level, the unit kicks on to bring the water temperature back up. That process of continual heating goes on 24 hours a day, seven days a week, even when you’re sleeping or away on vacation.

Since it runs continuously, often you’re paying to heat water that isn’t used. But whenever you do need hot water, it’s there waiting and ready in sufficient supply. Conventional storage water heaters come in many sizes; a small tank suits the modest needs of one adult, while larger tanks meet the demands of a family with multiple children.

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Pros of a Storage Water Heater

  • Installation costs. Installation costs of a storage water heater are typically much more reasonable than a tankless water heater due to the fact that installation usually involves trading out an older unit with a newer unit.
  • Less maintenance. A storage water heater uses a simple design, which means there is less of a chance of it breaking down and requiring service. And, if it does need service, repair costs are usually fairly cheap.
  • Affordable. The upfront cost of a storage water heater is significantly less than other hot water heater options, especially when the cost of installation is factored in.

Cons of a Storage Water Heater

  • Energy costs. Among the water heater options, storage tanks are the least efficient. Expect to pay more to run a storage hot water heater than other types. This is because the water heater must work to keep the water hot even when no one in the home is using hot water.
  • Space. Storage water heaters require a significant amount of space to house their 50 gallon tank, which is around 2 feet in diameter and more than 4 feet tall. While this may not matter if your water heater is located in an unfinished basement, it could be a space hog in smaller homes where a water heater may occupy valuable closet space.
  • Lifespan. Storage hot water heaters have a lifespan of between 10 and 15 years before they need to be replaced, whereas a tankless water heater has a life expectancy of more than 20 years.

Storage Water Heater Maintenance

Upkeep administered in periodic regular intervals can optimize the performance and significantly prolong the life of a water heater. Routine maintenance tasks include the following.

  • Draining and flushing the water heater twice a year to eliminate built-up sediment and minerals.
  • Testing the pressure relief valve to ensure it is in good working condition.

Before you begin any work on the water heater, remember either to turn off the power supply or set the gas switch to the pilot position.

Tankless Water Heaters

In comparison with a conventional water heater, the tankless variety promises significant energy cost savings, because it heats water only upon demand. In other words, the only water that you end up paying to heat is the hot water you actually use.

The downside is that tankless heaters are dogged by a low flow rate. Moving only 2 to 5 gallons per minute, a tankless water heater cannot accommodate more than one household use simultaneously. If you are running the dishwasher, you can’t take a hot shower until the dishwasher is finished. For that reason, some homeowners install multiple tankless units (feasible thanks to their compact design). Each is devoted to a different set of appliances or fixtures.

While a conventional water heater typically lasts 10 or 15 years, a tankless can be expected to function reliably for 20 years or more. That longevity comes at a cost, however; tankless heaters sell for about double the price of conventional models.

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Pros of a Tankless Water Heater

  • Endless hot water. Unlike storage water heaters, tankless hot water heaters provide an unending flow of hot water, if that the demand stays within the appliance’s listed flow rate.
  • No tank. Per their name, tankless hot water heaters do not require a bulky tank. The saved space can be significant in smaller houses, condos, or apartments.
  • Long lifespan. Tankless water heaters can last 20 years or more, which is far greater than the 10 to 15 years one will get out of a standard storage container water heater.
  • Energy efficient. Since tankless water heaters don’t need to work around the clock to keep 50 gallons of water heated, they don’t use as much energy as a conventional water heater. According to the U.S. Department of Energy, they’re about 24 to 34 percent more efficient than a conventional water heater.

Cons of a Tankless Water Heater

  • Temperature inconsistency. Tankless water heaters aren’t as consistent with water temperature as a conventional water heater, especially when multiple faucets are opened simultaneously.
  • High upfront cost. Tankless water heaters may offer savings on the back end, but they are very expensive upfront. According to HomeAdvisor, storage tank water heaters cost an average of between $700 and $2,000 for the tank and installation, depending on the model and market, while tankless heaters usually cost between $1,000 and $3,000.
  • Limited by flow rate. While a tankless hot water heater will never run out of hot water like a storage tank water heater, it does have its limitations. A tankless hot water heater can only provide so many gallons of hot water per minute, after which it will cease to deliver a steady supply of hot water.

Tankless Water Heater Maintenance

Maintaining a hot water heater will help increase its lifespan. One important regular maintenance task is done by a licensed plumber. The unit needs to be flushed at least once a year to eliminate accumulated mineral deposits.

In between those pro visits, it’s important to conduct some maintenance on your own. A tankless water heater has an air filter that needs to be cleaned regularly. If you have hard water, you may also need to remove and clean the water filter to remove sediment that can slow the flow of water to the water heater.

Electric Heat Pump Water Heaters

Powered by electricity, this type of water heater works to intensify the heat it draws from the air, transferring that heat to a quantity of water contained within its storage tank.

Because it works in concert with the environment, an electric heat pump system performs best in hot climates, where the technology can be up to three times more energy efficient than a traditionally designed unit.

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Pros of an Electric Heat Pump Water Heater

  • Energy efficiency. Since heat pump water heaters draw their heat from the surrounding air instead of working to generate it, they are much more energy efficient. In fact, they can be two to three times as efficient as a standard storage tank water heater. Energy Star models can save as much as $300 a year in energy costs, according to the Department of Energy.
  • Safe and environmentally friendly. Unlike standard storage tank water heaters, heat pump water heaters aren’t hot on the outside or present the hazards associated with heated pressurized water. And, since they use significantly less energy, they are a much greener option than a storage tank water heater.

Cons Of An Electric Heat Pump Water Heater

  • Expensive. Heat pump water heaters aren’t cheap. In fact, they cost about twice as much as a standard storage tank water heater.
  • May not meet demand. While heat pump water heaters can produce copious amounts of hot water during warmer months of the year when there is plenty of warm air, they can struggle to keep up with demand during cold winter months.

Electric Heat Pump Water Heater Maintenance

For an electric heat pump water heater to operate at peak level, its air filters must be cleaned regularly. Over time, sediment and dirt can build up inside the water tank, which may require you to flush it from time to time. This is a relatively simple task that most homeowners can complete without the expense of a pro. Otherwise, recommended maintenance is no different than with a conventional storage water heater.

Solar Water Heaters

A free and limitless energy source—the sun—powers solar water heaters, which are practical in any climate. This type of water heater features two parts: a solar collector and an insulated storage tank. Sometimes, the unit is installed on the roof, and other times it’s set-up in the yard.

Active solar water heaters distribute water by means of a pump, while passive models don’t have manmade mechanics. They rely on the force of gravity. Among solar models, there are two types of hot water heating systems.

  • Direct circulation systems. A pump circulates water through solar collectors and into a storage tank (suitable for regions with no extreme cold).
  • Indirect circulation systems. A pump circulates an antifreeze solution through solar collectors and a heat exchanger, the latter of which heats the water. Indirect circulation systems are popular in regions where temperatures reach freezing.

Passive solar water heating systems are less expensive, and there are two basic solar water heater types.

  • Integral collector storage systems. Solar collectors in the storage tank heat the stored water, which then flows into the home’s plumbing via gravity.
  • Thermosyphon systems. Solar collectors heat from below, causing the heated water to rise. When it rises, it travels naturally into the home.
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Pros of a Solar Water Heater

  • Energy savings. The main reason for going with a solar water heater is usually saving energy. Since they use the power of the sun versus electricity or gas, they are the cheapest way to produce hot water. Since they do not use electricity, they can save as much as $400 in operating costs each year.
  • Little maintenance. Solar water heaters use a surprisingly simple design, requiring little to no maintenance with the exception of an inspection every few years.
  • Environmentally friendly. Since a solar water heater takes 100 percent of its power from the sun, it’s able to heat water while creating zero emissions.

Cons of a Solar Water Heater

  • Require backups. Solar water heaters have enough insulation to keep water hot all through the night and into the morning. However, don’t expect them to last through several cloudy days. You’ll need an electric- or gas-powered backup for longer stretches of overcast skies.
  • Expensive installation cost. While the federal government does offer rebates and tax incentives for those who choose to install a solar hot water heater, the price of installing one is still very steep at any average cost of $9,000. It can take many years to recoup that upfront cost in energy savings.

Solar Water Heater Maintenance

Assuming that a solar specialist provides routine maintenance every 3 to 5 years, this type of water heater can be expected to run for 15 or 20 years. With a solar hot water system of any kind, there are a number of inspection and upkeep tasks that homeowners can do themselves.

  • Regularly clean dusty or soiled collectors.
  • Monitor the connections between a storage tank and its piping.
  • Look for damaged insulation covering pipes, ducts, and wiring.
  • Check the tightness of all nuts and bolts responsible for securing the collectors in place.
  • In an active system, verify that the pumps are operating properly.

Condensing Water Heaters

Though used mainly in commercial settings in the US, condensing water heaters are very popular in the UK (they’re referred to as combination boilers there), where they can be found in around 70 percent of homes.

A condensing water heater comes in tank and tankless versions. Both types heat water by pulling air and natural gas fuel into a combustion chamber. Like standard natural gas tank and tankless water heaters, condensing water heaters use a gas burner to heat the water that is either stored in a tank (storage tank heater) or passing through it (tankless water heater).

Standard storage tank and tankless water heaters vent the hot exhaust gases created by the combustion process of burning natural gas through a steel tube and out of the house where the heat is lost into the air. Rather than vent that exhaust, condensing water heaters send those combustion gases (which are about 300 degrees) to a condensing tank where it is also used to heat the water.

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Pros of a Condensing Water Heater

  • Energy savings.  By using “waste heat” from the combustion process, condensing water heaters have efficiency ratings as high as 98 percent. That’s quite a difference compared to standard natural gas tank and tankless water heaters, which have efficiency ratings that range between 60 and 70 percent .
  • High recovery rate. A condenser water heater has an incredible recovery rate, making it nearly impossible to run out of hot water.
  • Environmentally friendly. Since a condensing water heater uses almost all the heat it generates to warm water, it uses much less energy, making its carbon footprint much smaller than a conventional water heater.

Cons of a Condensing Water Heater

  • Expensive. A condensing water heater costs two to three times the price of a conventional water heater.
  • High Installation expense. You’ll need to reconfigure the gas lines and venting pipes to accommodate a condensing water heater, which can be costly.

Condensing Water Heater Maintenance

With regular maintenance, expect a condensing water heater to last for about 10 to 15 years. A condensing hot water heater requires annual maintenance, some of which can be completed by a homeowner. For example, condensing water heaters use a limestone cartridge to neutralize the condensation created during the condensing process. That cartridge must be checked periodically, which is a task most homeowners can handle. However, checking and cleaning the boiler, which requires one to disassemble the boiler, requires a professional.

  • Replace or refill neutralizer cartridge annually.
  • Check and clean the boiler combustion chamber.
  • Inspect and clean the water heater’s drain system.

Other Water Heater Features To Consider

When purchasing a hot water heater, it’s vital to consider its build quality as well as additional features and accessories that may make it safer and more efficient.

Valve and Tank Materials

Hot water tanks are designed to withstand the pressure created when water is heated to near boiling temperatures while also providing insulation to prevent heat loss so the heater doesn’t have to work as hard to keep the water in the tank hot.

Water heater tanks have a steel outer jacket that’s strong enough to handle pressure with a steel inner jacket that has a layer of plastic bonded to its inside to prevent rusting. A layer of insulation between the inner and outer jackets helps to prevent heat loss.

While most hot water heaters have similar tank construction, some vary in their types of valves. Some use brass fittings that hold up longer, while others use plastic fittings, which are more susceptible to wear and tear.

Advanced Technology

Some water heaters have smart technology that allows you to monitor the water heater’s operation without having to go to the appliance. These water heaters connect to a home’s WiFi, allowing the user to monitor water temperature while viewing data on the water heater’s energy consumption via a smartphone.

By using a compatible app, the user can schedule off-times for the water heater, so it doesn’t waste energy heating water during periods when the home’s occupants are away or asleep. Smart water heaters will also send the user alerts should the water heater malfunction or spring a leak.

Accessories

There are several accessories that can be vital for certain water heaters.

  • Pan and drain line. If a water heater is in the attic or upper floor of the home where a leak could cause significant damage, make sure to install a pan and drain line beneath the heater to prevent damage from leaks.
  • Water shut-off. Install a dedicated water shut-off on the supply line to the water heater if there isn’t already one. This will make it easy to stop the flow of water to the water heater in the event of a problem or if it needs maintenance.
  • Water heater blanket. If you’re trying to improve the efficiency of a storage tank water heater, try using a hot water heater blanket. It adds an additional layer of insulation so the hot water heater doesn’t need to work as hard to keep the water hot.
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Final Thoughts

By knowing the advantages and disadvantages of each of the different types of hot water heaters, you are better able to make the best decision when purchasing a new hot water heater. Factors to consider include how much hot water the heater needs to produce to meet the daily needs of your family. When weighing the varying costs of each type, make sure to examine not only the upfront expense of the water heater and its installation, but also its annual operating costs.

FAQs About Water Heater Types

Q. Which type of water heater is the most popular?

Although other types of hot water heating systems are becoming more popular, standard storage tank water heaters are still the most popular type of water heater on the market. They deliver large capacities and reliable operation.

Q. What are the two main types of water heaters?

The two main types of hot water heaters are storage tank and tankless. These make up the vast majority of water heaters in homes today.

Q. Is a 50-gallon water heater enough for a family of 4?

A 50-gallon water heater is usually sufficient for a family or four. Larger families may want to consider purchasing an 80-gallon water heater.

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