What is a tankless water heater?
Updated August 2026
A tankless water heater is a wall-mounted unit that heats water only while a tap is open, firing a burner or element around a heat exchanger the water flows through. Open a hot faucet, a flow sensor registers roughly half a gallon a minute moving, and the burner lights within a couple of seconds. Nothing is stored, so there is no tank shedding heat all night and no 50 gallons waiting to end up on the floor. Gas models are rated 150,000 to 199,000 BTU and deliver 3 to 7 gallons per minute depending on how cold the incoming water runs.
Where it is
It hangs on a wall in a box about the size of a carry-on suitcase, roughly 28 by 18 by 10 inches, which is why these end up in garages, utility closets, and on exterior walls in mild climates, and why swapping out a tank frees a 16-square-foot corner. Check underneath for two service valves with hose ports; those are for flushing, and their absence means the installer cut a corner. Gas units need a dedicated 3/4-inch gas line and sealed stainless or PVC venting rather than old B-vent. Whole-house electric models need two or three 40-amp double-pole breakers and usually a 200-amp panel.
What it does
Eliminating standby loss is where the savings live. The U.S. Department of Energy puts tankless units at 24 to 34 percent more efficient than storage tanks in homes using 41 gallons of hot water a day or less, and 8 to 14 percent in heavy-use homes. The trade-offs are flow and scale. Output is capped by gallons per minute rather than tank size, so a unit sized for two showers disappoints the moment a third starts, and 40-degree winter inlet water roughly halves the rated flow. Hard water is the real adversary: calcium plates the inside of the heat exchanger, showing up as error codes, wandering temperatures, and falling flow, and a scaled exchanger is a $600–1,200 part. Maintained, these units reach 18 to 20 years, about double a tank.
Maintenance
Descale once a year, twice if your water runs above 12 grains per gallon of hardness. The job takes a submersible pump, a bucket, 4 gallons of white vinegar, and 45 to 60 minutes circulating through those service valves. A plumber charges $150–300 for the same work. Rinse the inlet air filter and the cold-water inlet screen every 6 to 12 months (air filter intervals) and check the vent termination for nests each season. A whole-house softener or a scale filter buys back most of the descaling effort. The tankless checklist holds the full routine, with lifespan and replacement timing beside it.
What it costs to replace
A replacement tankless water heater runs $2,500–5,000 installed, and $4,500–6,500 when the gas line and venting have to be upsized.
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Frequently asked questions
Is a tankless water heater worth the money?
On energy alone the payback is slow: $75–200 a year in savings against a $1,000–2,500 premium over a new tank. The case improves on the other three counts. The unit lasts 18 to 20 years against 8 to 12, so you buy one instead of two. It hands back a closet-sized footprint. And it cannot dump 50 gallons through a ceiling. For a house with a tank sitting in a finished attic or on a second floor, that last point usually settles the question.
How many gallons per minute do I need?
Add up what runs at the same time. A modern shower draws 1.8 to 2.5 gpm, a kitchen faucet 1.5, a washing machine about 2, so two simultaneous showers means roughly 5 gpm. Then account for temperature rise: 70-degree groundwater in Florida needs a 50-degree lift, while 40-degree Minnesota water needs 80, and the same unit that makes 7 gpm in the first case makes 4 in the second. Size for your coldest month, not for the brochure number.
What is the cold water sandwich?
It is the slug of cool water that arrives a few seconds into a shower taken right after someone else shut the hot off. Water already in the pipe stays warm, the burner needs 2 to 5 seconds to relight, and the gap between the two lands on your head. Recirculation pumps and small buffer tanks (newer models build in 1 to 2 gallons) mostly cure it. Treat it as a comfort quirk of the technology rather than a defect.
What happens if I never descale it?
Scale insulates the heat exchanger, so the burner works harder to deliver less hot water, and most manufacturers void the warranty without proof of annual service. Early symptoms are a shower that swings between hot and lukewarm, a slow drop in flow, and error codes tied to exchanger or exhaust temperature. In water above 15 grains, a neglected exchanger can be finished in 6 to 8 years, trading a $150–300 yearly habit for a $600–1,200 part or an early replacement.