14 Tankless Water Heater Pros And Cons (Is It Worth It?)

If you want to know the pros and cons of tankless water heaters, you are in the right place! In this guide, we will review:

  • The 8 advantages of on-demand water heaters
  • The 6 disadvantages
  • How tankless units save space
  • Endless hot water capacity
  • And more!
tankless water heater pros and cons (2)

I have seen many tankless water heaters as a home inspector, and homeowners (and plumbers) usually love these endless hot water machines!

In fact, losing hot water is definitely one of the top complaints of homeowners who use a lot of water (or have a big family).

With a tankless water heater, as long as you have the right capacity and installation—it will give you endless hot water on-demand.

Keep reading to see our review of tankless water heater pros and cons!

What Is An On-Demand Water Heater?

A tankless water heater is also known as an on-demand water heater since it only heats up water when needed.

Instead of storing hot water in a 50-70 gallon tank, a tankless water heater heats up water only as it passes through a small heat exchanger. The heater exchanger looks like a small cluster of pipes with a serpentine or winding structure to it.

Tankless Water Heater Pros And Cons

Advantages

Disadvantages

Pro 1 - Endless Hot Water

Probably the #1 reason for a tankless gas water heater is that they can provide endless hot water—especially for showers.

With traditional water heaters, a 50-75 gallon water heater stores hot water, and once that tank fully empties, it will take some time to get hot water again.

Since an on demand hot water heater heats the water only as it passes through, it will never run out of hot water.

The exception to this rule is if you exceed the flow rate or capacity of the tankless water heater. We recommend consulting with a plumber to do a load calculation of your home which is based upon the number of fixtures, the size and length of water piping, the size of the gas piping, and other factors.

Pro 2 - Energy Efficient And Saves Money

Homeowners may realize significant cost-savings with a tankless water heater over 5-10 years.

According to the U.S. Department of Energy, tankless water heaters can be up to a whopping 24-34% more energy efficient than traditional water heaters.

Especially with a tankless gas water heater, your gas bill can be reduced dramatically when replacing an old tanked water heater.

The gas savings are due to the fact that it is only used when hot water is needed. A traditional water heater will fire up over and over to maintain a set temperature even if hot water isn't being used.

Condensing tankless water heaters are highly efficient and use PVC pipes for venting

Pro 3 - Saves Space

Tankless water heaters save space since they are so small and compact.

In fact, the physical size of a tankless water heater is about 7 times smaller than a traditional tanked water heater!

Since on-demand water heaters take up such little space, you may be able to reclaim your closet or utility area for storage or other purposes.

And because tankless water heaters are so small, you can even easily install them in an attic or outside.

If you want to purchase an under-sink tankless unit, these are even smaller in size and can easily fit underneath a sink cabinet.

Pro 4 - May Qualify For Federal Tax Credit

According to EnergyStar.gov, your new tankless water heater may qualify for a $300 federal tax credit for energy-efficient water heaters.

It will need to be Energy Star certified, have a Uniform Energy Factor Rating of at least 0.82, or a thermal efficiency rating of at least 90% to qualify.

Pro 5 - Reduce Leak Risk

Tankless gas water heaters tend to be less prone to corrosion and leaking than traditional water heaters.

Regular tank-style water heaters corrode from the inside of the tank since water just sits there all day.

In fact, traditional water heaters have anode or 'sacrificial' metal rods that are supposed to rust instead of the tank itself.

Most people never replace the anode rods and the entire water heater rusts.

The rusting and corrosion frequently cause leaks and water damage.

Pro 6 - Cleaner Water With Tankless

Tankless water heaters, over their lifetime, will generally produce cleaner water than traditional water heaters.

Regular water heaters tend to rust and corrode as explained earlier, but they also deposit scale (minerals) at the bottom of the tank.

So with traditional water heaters, your tap water may eventually contain a high level of scale as well as heavy metals from corrosion.

Since there is no stored or standing water, you will tend to have cleaner water with tankless units.

Pro 7 - Less Risk Of Explosion Or Burns

Instant water heaters have a much smaller risk of exploding or scalding as compared to traditional water heaters do.

All traditional tank-style water heaters have something called a TPR valve which stands for temperature pressure release.

This valve is supposed to open and release hot water and vapor if the temperature or pressure of the water tank gets too high.

Basically, traditional water heaters have the potential to explode if the pressure or temperature exceeds safe levels.

Also, even if the TPR valve is working correctly (they frequently break), there is a risk of scalding when the TPR valve goes off and someone is close to the unit.

Pro 8 - Tankless Water Heaters Last Longer

On-demand hot water heaters have a life expectancy of around 15-20 years.

Traditional water heaters only have a life expectancy of around 8-10 years.

Basically, a tankless electric water heater can last twice as long as a traditional water heater.

Con 1 - More Costly Upfront

Let's face it, tankless waters will cost much more upfront.

In fact, you can expect to pay up to 3x more for a tankless water heater for parts and labor than a traditional water heater.

The low end for a tankless water heater is usually around $1500 (not including labor) but can go as high as 10-15k.

All of the extra parts and labor needed for a tankless unit can add up, such as the venting, electrical wiring, rerouting of water lines, and other components.

Con 2 - May Not Realize Cost Savings

Homeowners may not actually realize the potential savings of tankless water heaters.

Since you will get endless hot water, the home occupants may just take longer showers!

If the average person takes a shower that is now twice as long, all of the cost savings will disappear.

In addition, if your total water usage of the home is 50-gallons or less, you will also probably not see any cost savings since it really picks up when water usage is higher.

Con 3 - More Costly To Install

tankless water heater with 3/4-inch gas piping

Tankless water heaters will typically cost around $1,000 to $3,000 to install but could be even more for complex installations.

Your new on-demand water heater may require new venting, rerouting water lines, new gas piping, and other parts that increase the cost.

If your traditional water heater has 1/2-inch gas piping, you will likely need to install new 3/4-inch gas piping for the tankless water heater.

And depending on where you install the tankless unit, you may need to reroute your water lines to get to the new location.

You also may need to lay down new electrical wiring and a new breaker at the panel box.

All of these extra installation costs and labor will add a lot to the final price tag.

Con 4 - Requires Annual Flushing 

Tankless water heaters require annual flushing every year.

The flushing is done with vinegar or a cleaning solution and it removes scale or mineral buildup from inside the unit.

If the tankless water heater isn't flushed, these minerals can clog up all of the aerators (screens) on your plumbing fixtures, and your water pressure will come to a halt.

Having to remove and clean all of the aerators in your home will be a pain in the rear to say the least.

And if you don't want to do the flushing yourself (it isn't that hard), you can expect to pay a plumber a few hundred bucks each year.

Con 5 - No Hot Water During Power Outages

Demand or instant water heaters won't be able to produce hot water during power outages.

With tank-style water heaters, all of that hot water is still in the tank when power goes out, and it could last for days.

And if the traditional water heater is insulated, that hot water could potentially last for a week.

This problem can be solved by purchasing a generator for when the power goes out.

Con 6 - May Need Whole House Water Filter

The tankless water heater may need a whole house water filter or descaler if you have hard water.

The manufacturer may even require a whole house water filter or you may even avoid the warranty.

Frequently Asked Questions

What Is The Main Downside?

Probably the #1 downside of tankless water heaters is the upfront cost. Instant water heaters can be 3x more costly (or greater) than traditional tanked units. 

What Are The Common Problems I May Encounter?

Some typical problems with on-demand hot water heaters include mineral buildup (if it isn't flushed regularly), flame ignition failure, vent blockages (animals going down vents), and other problems.

Should I Go With A Tankless Unit?

Whether an on-demand hot water heater is worth it depends on the cost of the unit, the cost of the installation, how much water you use, the size of your gas/water piping, and other factors. A licensed plumber can help you decide the best course of action.

What Is The Average Cost?

On-demand water heaters typically cost around $1,500 to $3500 but there are higher end units that can go as high as $10k to $15k. A lot of the cost will be in the installation and that will be case-by-case.

What Is The Point of A Tankless Water Heater?

The point of a tankless water heater is to heat the water instantly as it passes through the heat exchanger. This means there isn't any stored hot water which saves space and it gives an endless hot water supply.

How Are Tankless Water Heaters Maintained?

The most common maintenance requirement for tankless heaters is annual flushing of deposits. This maintenance task is usually done with vinegar but professional cleaners can also be used.

Final Thoughts

As with most things in life, there is always an upside and a downside, and instant water heaters are no exception.

Even though most homeowners are happy with their tankless units, and plumbers tend to love them—that doesn't mean it is the best option for everyone.

If you don't use a lot of hot water, or if you have to do an expensive relocation of the unit into an attic, or have to upgrade your gas or water piping—it just may not be worth the cost.

I hope you enjoyed our guide on tankless water heater pros and cons!

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