Ultimate Guide to Choosing the Best Tankless Water Heater in the USA (2025)

Why Choose a Tankless Water Heater? Tankless water heaters, also known as on-demand water heaters, provide hot water only when needed, making them more energy-efficient and space-saving than traditional tank water heaters. They reduce standby …

Why Choose a Tankless Water Heater?

Tankless water heaters, also known as on-demand water heaters, provide hot water only when needed, making them more energy-efficient and space-saving than traditional tank water heaters. They reduce standby heat loss, lower electricity bills, and have a longer lifespan. If you’re considering upgrading your water heating system, this guide will help you make the best choice.


1. How Does a Tankless Water Heater Work?

Unlike traditional water heaters that store and continuously heat a large volume of water, a tankless water heater heats water only when a tap is turned on. Cold water travels through a heat exchanger and is instantly heated by either gas or electricity, providing hot water on demand.

Pros & Cons of Tankless Water Heaters

Energy efficient – No standby heat loss, saving up to 30% on energy bills.
Space-saving – Compact design fits in smaller areas.
Endless hot water – No need to worry about running out.
Longer lifespan – Lasts 20+ years with proper maintenance.
Higher upfront cost – More expensive than traditional tanks.
Limited flow rate – May struggle with multiple simultaneous uses.
Installation complexity – Often requires professional installation.


2. Gas vs. Electric: Which One is Right for You?

Gas Tankless Water Heaters

✔ Best for large households with high hot water demand.
✔ Works efficiently even in cold climates.
✔ Higher upfront cost but cheaper long-term energy costs (for homes with gas access).
❌ Requires venting for gas exhaust.
❌ Professional installation is a must.

Electric Tankless Water Heaters

✔ Ideal for small homes, apartments, or warmer climates.
✔ Lower upfront cost and easier installation.
✔ More energy-efficient than gas models.
❌ Not ideal for large households due to lower flow rates.
❌ Higher electricity costs in some areas.

👉 Key Takeaway: If you have a large household and access to natural gas, a gas-powered heater is a better option. If you want a budget-friendly, eco-friendly, and easy-to-install option, go for electric.


3. Factors to Consider Before Buying

1. Flow Rate (Gallons Per Minute – GPM)

Tankless heaters are rated by their flow rate, which determines how much hot water they can provide at once.

  • 1-2 people: 3-5 GPM
  • 3-4 people: 6-8 GPM
  • 5+ people: 9+ GPM

2. Temperature Rise

If you live in colder regions, your incoming water temperature will be lower, meaning your heater needs to work harder. Choose a unit with a higher BTU rating for efficient heating in such areas.

3. Energy Efficiency & Certifications

Look for Energy Star certified models that offer high thermal efficiency (above 80% for gas and 98% for electric units).

4. Installation & Maintenance

  • Gas heaters require venting and professional installation.
  • Electric units are easier to install but may require electrical upgrades.
  • Regular descaling and flushing can extend the unit’s lifespan.

4. Top-Rated Tankless Water Heaters in the USA (2025)

Here are the best models based on performance, reliability, and user reviews:

RankModelTypeFlow Rate (GPM)Energy FactorBest For
1Rinnai RU199iNGas11 GPM0.96Large homes, high demand
2Stiebel Eltron Tempra 24 PlusElectric5 GPM0.99Small homes, eco-friendly
3EcoSmart ECO 27Electric6.5 GPM0.98Budget-friendly, apartments
4Rheem RTGH-95DVLNGas9.5 GPM0.96Cold climate, high efficiency
5Takagi T-H3-DV-NGas10 GPM0.95Commercial & residential

📌 Pro Tip: Choose a model based on your household size, climate, and hot water demand.


5. Installation Guide & Cost Breakdown

Installation Costs

TypeDIY CostProfessional Installation
Electric$500 – $800$1,000 – $2,000
Gas$1,000 – $2,500$2,000 – $4,000

DIY vs. Professional Installation

  • Electric heaters can be DIY-installed if you have basic electrical knowledge.
  • Gas heaters must be installed by a professional due to venting and gas line work.

6. Common Mistakes to Avoid

🚫 Undersizing your unit – Ensure you get a unit with the correct GPM for your home.
🚫 Ignoring maintenance – Descale every 6-12 months to prevent buildup.
🚫 Skipping professional installation – Especially for gas models, improper setup can be dangerous.


7. FAQs About Tankless Water Heaters

Q: Can a tankless water heater run out of hot water?
A: No, as long as it meets your flow rate needs, you get endless hot water.

Q: How long do tankless water heaters last?
A: 20+ years, nearly double the lifespan of traditional water heaters.

Q: Is a gas or electric tankless heater better?
A: Gas is better for large homes; electric is ideal for small households & apartments.

Q: Do tankless water heaters save money?
A: Yes! They reduce energy bills by up to 30% compared to tank models.


Final Thoughts: Is a Tankless Water Heater Right for You?

If you want energy efficiency, endless hot water, and a long-lasting solution, a tankless water heater is a great investment. Choose based on your home size, climate, and budget to get the best model for your needs.

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