Water Heater Buying Guide: Tank, Tankless, Heat Pump, Solar?

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When I was fixing up old houses or building new houses, I had to learn a lot – real fast. It seemed that every house was a new problem. I hope this water heater buying guide solves whatever problem you are facing.

First I’ll give you the understanding of what you need and why you need it. Then I’ll provide examples of excellent products that you should seriously consider.

I suggest that you buy the the best water heater for your needs and budget. Then hire a professional to install it for you. So, keep reading.

Water Heater Buying Guide – The Important Basics

In a typical household budget, approximately 20% of the expenses goes towards heating water.

This is second to only the cost of cooling and heating your home. Water heaters are however most often ignored until they break down, resulting in no hot water being available, and possibly, a basement that may be flooded.

If you are in the position where your water heater is close to the end of its life and you know you’ll need to replace it soon, it’s good to know that there are many good choices available nowadays, thanks in part to recent federal regulations that mandate that water heaters need to be energy-efficient.

On-demand (tankless) water heaters are extremely energy efficient, while even storage tank water heaters have evolved over the years to improve energy efficiency dramatically.

Homeowners normally replace old water heaters with one that uses the same fuel — electricity or natural gas. Replacing a tank water heater with a tankless unit can be relatively expensive as it requires retrofitting of the plumbing and sometimes even the electrical system.

When building a new home, or renovating or extending an existing one, more options are available and it may make economic sense to install a tankless water heater.

Water Heater vs Boiler. What’s The Difference?

A water heater, does just that heat water – for your kitchen and bathroom. Although it is possible for a hot water heater to heat the house, generally that isn’t what they are used for. There are better products for heating the house, such as a boiler.

Water Heater Buying Guide. AllWaterProducts.com

Whereas, a boiler can be used to heat the whole house through radiant floors or by steam heat radiators, they can also heat water for your shower, sink, etc. When a boiler does both jobs, they are known as combination boilers (combi boilers).

Water Heater Capacity

A typical tank water heater has a capacity of 40, 50, or 55 gallons or more. The size that is used is determined by on the number of people sharing the home and the peak water usage.

A family of five may, for example, in an average day wash several loads of laundry, run the dishwasher, and take a number of showers. Although this adds up to 100 gallons of hot water or more, it doesn’t mean that you need a 100-gallon storage tank.

It is important to determine the first-hour rating (FHR) for a storage tank water heater. This is the number of gallons of hot water a heater can deliver per hour, starting with a full tank. The FHR for a water heater is indicated on the Energy Guide label.

Sizing Water Heaters

The water heater’s first hour rating is used to determine the size of a storage water heater required for your home. The same applies to a heat pump with a tank. The FHR is the number of gallons of hot water the heater can deliver within an hour.

The FHR depends on the capacity of the tank, the type of heat source (element or burner), and the size of the heat source.

In the top left corner of the EnergyGuide label you’ll find the first hour rating displayed as “Capacity (first hour rating).” According to Federal Trade Commission regulations, an EnergyGuide label is required for all new conventional storage water heaters, although this is not required for heat pump water heaters.

Manufacturer literature will most probably also specify the first hour rating. To determine which water heater model is suitable for your home, you’ll first need to estimate what your peak hour demand is.

To estimate the peak hour demand for your home:

  • Establish when the most hot water in your home is used (morning, noon, evening), taking into consideration the number of people sharing the home.
  • Use the worksheet below to estimate the maximum amount of hot water that is used during this hour — this is the peak hour demand. It should be noted that the worksheet can’t be used to estimate the total daily hot water usage.

The example used in the worksheet estimates the total peak hour demand to be 37 gallons. The household therefore needs a water heater with a 35 to 39 gallon first hour rating.

Worksheet for Estimating FHR / Peak Hour Demand *

UseAverage gallons of hot water per usage Times used during 1 hour Gallons used in 1 hour
Shaving (.05 gallon per minute)1×1=1
Hand dishwashing or food prep (2 gallons per minute)3×1=3
Automatic dishwasher7×=
Clothes washer5×=
   Total Peak Hour Demand=37

This information was adapted from the Federal Energy Management Program Energy Cost Calculator.

*The number used in the worksheet above is based on standard water usage with no conservation measures in place.

Efficiency standards that have been updated recently has resulted in the efficiency in water heaters with a capacity of less than 55 gallons now having been boosted by 4%, while the efficiency of water heaters with a capacity of greater than 55 gallons has improved between 25% and 50%, depending on the technology utilized — condensing or heat pump.

When looking at replacing your water heater, the new one will not necessarily fit in the same space as your old one. Newer models have efficiency improvements, including increased insulation, and this may have resulted in them being taller and/or wider than older water heaters of the same capacity.

As tankless water heaters don’t contain much water, the relevant equivalent number you’re looking for is the gallons-per-minute rating (GPM). This number indicates how much hot water can be delivered by the heater over a set period.

A higher GPM means the unit can deliver more hot water during the time. A tankless water heater with a higher GPM is required for a home with multiple bathrooms and / or a big family. A typical shower will for example use up to 2.5 GPM.

Buying a Water Heater

Buying a new water heater for whatever reason can be pretty intimidating. The steps described below will give you a good starting point and a good idea of what you should be looking out for:

  • Decide which type of water heater you want.
  • Determine if you are staying with your current fuel source or changing the fuel source.
  • Get a tape measure and figure out how much space you have available to use.
  • Determine the tank capacity that provides the amount of water you need and that fits in the space you have available.

Water Heater Types Guide

There are several types of water heater available, depending on how the water will be heated (gas or electric) and how much hot water will be used. Although some types could reduce energy costs by up to 50% compared to regular storage models, the up-front costs of these types tend to be higher.

Storage Tank Water Heaters

The most common type of water heater used nowadays is still the storage tank. This type consists of an insulated tank that is used to heat and store water until it is needed. Warm water is then fed from a pipe emerging from the top of the heater.

These systems also include safety features such as pressure and temperature relief valves, which open if preset levels are exceeded.

Water heaters using natural gas as a heating source typically cost less to operate and use less energy (about 50%) than what electric water heaters do, although gas heating models typically cost more up-front.

Water heaters are available in liquid propane (LP), natural gas and electric models. LP and natural gas water heaters are less expensive to operate and use less energy than electric models of the same capacity.

State Proline Series 40 Gallon Capacity 4.5 kW water heater

State Proline Series 40 Gallon Capacity 4.5 kW. Check This Out - Click Here 

When purchasing a water heater, look at the EnergyGuide label to determine its yearly operating costs and energy efficiency.

The size of a storage tank water heater is determined by how many gallons of water they can hold.

To ensure that your home has sufficient hot water, you need to estimate how much hot water will be needed on average.

Generally, the larger the household, the bigger the tank needed, except when a tankless water heater is used.

You should also look at the recovery rate when considering buying a storage tank water heater. This is the volume of water that can be heated in an hour. The greater the demand for hot water in the peak hour, the higher the recovery rate required.

If you going to use a standard tank style water heater, then take a look at the minimum tank sizes listed below.

Minimum Capacity Recommendations

Electric Water Heater:

  • 1 – 2 people: 30 gallons
  • 2 – 3 people: 40 gallons
  • 3 – 4 people: 50 gallons
  • 5 or more people: 80 gallons

Gas Water Heater: These figures are different than for the electric water heaters, because gas water heaters can heat more water volume in less time.

  • 1 – 2 people: 30 gallons
  • 2 – 3 people: 40 gallons
  • 3 – 4 people: 40 gallons
  • 5 or more people: 50 Gallons

On-Demand (Tankless) Water Heaters

Tankless water heaters don’t store water, but heat the water with heating coils as it is needed. These newer style heaters are much more energy-efficient than using storage tanks.

This type of water heater is available in natural gas, LP and electric models.

Some of the newer gas models are super efficient “condensing” heaters.

The smaller capacity versions are ideal for situations where the demand for hot water is typically not required at more than two points at the same time. Whereas, the larger versions can supply 3 or 4 bathrooms.

For existing homes, tankless water heaters using natural gas as a heat source is often the best options, as electric models may require an upgrade of the home’s electrical systems which could be very expensive.

Stiebel Eltron Tankless Heater – Tempra 36 Plus – Electric, On Demand Hot Water

Compare all of the Stiebel Eltron electric tankless water heaters – Click Here Now 

Takagi T-H3-DV-N Condensing High Efficiency Natural Gas Indoor Tankless Water Heater

10-Gallon Per Minute Takagi Condensing High Efficiency Natural Gas Indoor Tankless Water Heater T-H3-DV-N 199,000 BTU. SCAQMD Rule compliant. Buy on Amazon

Hybrid (Heat Pump) Water Heaters

Heat pumps convert heat in the air and transfer it to water. They are up to 100% more energy efficient than standard electric water heaters. Of course, they are more expensive than electric-only models, but the payback time is relatively short.

The one drawback they have is that they don’t work very well in cold spaces and need to be located in areas that remain at between 40° F and 90° F.

As the actual heat pump is at the top of the unit, a hybrid water heater needs at least 7 ft. of clearance from the ceiling to the floor. It also needs a nearby drain to discharge the condensate and as much as 1,000 cubic ft. of uncooled space to extract enough heat from the air.

50 Gallon Voltex Residential Hybrid Electric Heat Pump Water Heater

50 Gallon A.O. Smith Voltex Hybrid Electric Heat Pump HPTU-50N. Terrific choice for southern states and in basements in the northern states. Click Here Now 

Solar Water Heaters

A solar water heater uses a solar cell mounted on the roof to absorb the heat from the sun and transfer it to a fluid similar to antifreeze in a closed-loop system that runs through the water tank.

They deliver excellent savings in summer, and are most suitable for sunny, warm regions. On cloudy and cold days however, the savings are less.

They also collect snow and need to be cleaned off during the winter.

Most models use a backup system that automatically kicks in when required.

SW-38 Solar Water Heater Panels

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Solar water heaters often come complete with displays that indicate collector and tank temperatures, as well as pressure readings and other useful information.

To recoup purchase and installation costs on a solar water heater, it typically takes between 10 and 30 years, even when local and federal rebates are taken into account.

Condensing Water Heaters

Available in tankless or tank style water heaters.

If you require a water heater that is bigger than 55 gallons and plan on using gas as a heat source, condensing water heaters are an excellent option. 

This type uses a tank like conventional water heaters. However, they generate additional heat by not letting the exhaust gases escape without pulling the heat out of those gases. The gases are then blown to the base of the unit through a coil, where incoming cold water absorbs most of the heat.

For hot water, hydronic heating, and radiant floor systems. Takagi T-H3J-OS-N Condensing High Efficiency Natural Gas Outdoor Tankless Water Heater, 6.6-Gallon Per Minute. SCAQMD Rule compliant. Click Here 

Utility or Point-of-Use Water Heaters

When needing to provide hot water to garages, shops or outbuildings, small storage tank water heaters, also called point-of-use or utility water heaters, are a good option.

This type of water heater usually has a capacity of between 2.5 and 19 gallons.

The biggest of these type of water heaters are also suitable to provide hot water to a secondary bathroom located far away from a main water heater.

Only needs  2-D cell batteries for ignition – No other electricity needed. Provides 10 Liters or 3.1 GPM (gallons per minute). Marey GA10LP Propane Gas Tankless Water Heater. Click Here 

Water Heaters for Mobile Homes

Mobile homes require water heaters that have specifically been designed for them. All heaters must be approved by Housing and Urban Development (HUD).

Water heaters for mobile homes come in either electric or gas models. Gas heaters are typically more expensive than electric ones.

If you decide to use a gas water heater, ensure that you purchase the correct type for the gas you will use – natural gas or propane.

AO Smith FMD-40 Water Heater with Residential Natural/LP Gas

Check out this HUD Approved residential water heater. Click Here 

You will also need to look at where you want to locate the heater. You need to purchase a sealed combustion gas water heater if the gas heater will be enclosed without outside access, while a standard gas water heater is sufficient if there is outside access.

When selecting your water heater for a mobile home, check the measurements carefully, as the door openings on an average home are bigger than those on a mobile home.

Water Heater Features Guide

Fuel Sources

The type of fuel source available in your home will, in part, determine which water heater will best meet your requirements. The list below details the differences between water heaters using different fuel sources.

Heat Pump or Hybrid:

  • Converts heat in the air to heat water
  • Uses air from the room where it is located or outside air
  • Available as an add-on to an existing tank or as a built-in water tank
  • Bigger than a standard electric water heater
  • More expensive to purchase
  • More energy-efficient, resulting in lower utility bills
  • Sizes: Between 50 and 80 gallons

Gas or Propane:

  • Heats water with a burner
  • Needs air circulating around it
  • Combustible materials should not be stored in close proximity
  • More energy-efficient than an electric water heater
  • More expensive than an electric water heater
  • Sizes: Between 30 and 100 gallons


  • Heats water with one or two replaceable elements
  • Several high-efficiency options available
  • Less expensive than other types
  • Sizes: Between 28 and 100+ gallons

How Much Space Do I Need?

If you don’t have the space to accommodate a standard sized water heater, there are several alternatives available. The smallest ones are tankless heaters which provide the same performance level and are available as electric or gas (propane or natural) units. Your other choice are short tank “lowboys” (see below).

How Tall Are Water Heaters?

Tall water heaters are between 50 and 76 inches high and have a capacity of up to 100 gallons. These heaters are best located in garages or basements where height probably won’t be a problem.

Hybrid water heaters need extra open air space to work properly. So, it’s a good idea to check the product’s specifications before buying one.

Short Water Tanks: Some Call Them “Lowboys”

These water heaters are wider and shorter than standard water heaters. So. they can still hold the same volume of water as their bigger counterparts.

Additionally, they can still fit in smaller, cramped areas, such as inside of cabinets and in crawlspaces.

Lowboys measure between 30 and 49 inches high and their water capacity reaches up to 50 gallons.

Rheem XE38S06ST45U1 38-Gallon Short Profile Electric Tank Water Heater

Rheem 38 gallon elecrtic short “lowboy” water heater

Short on space? Click Here

Dry-Fire Protection

Dry-fire protection is available for electric water heaters and will prevent the upper element from burning out if it is not surrounded by water.

Intuitive Technology Conveniently Saves Money

The latest design of water heaters allows for the temperature and other operating parameters to adjust automatically based on specific use patterns and needs. Benefits include smarter performance, increased durability and improved energy efficiency.

This will prevent the need for the add-on timers that act like the preset furnace thermostats.

High Efficiency and Energy Star

ENERGY STAR is a trusted symbol for energy efficiency backed by the government. It helps protect the environment and consumers save money through energy-efficient practices and products.

High-efficiency water heaters should be considered for two reasons: to save money and to help the environment.

The efficiency of water heaters is indicated by the energy factor (EF) rating. A higher EF means the model is more efficient.

Although some of the more efficient models are slightly more expensive, they will save you money in the long run, and it will be done in an environmentally friendly manner.

The operating costs and performance of different water heater models can be compared by looking at the EnergyGuide label. The information on it will give you an idea how the water heater will perform, while also providing you with the estimated annual operating cost.

WiFi Capabilities

There are now WiFi models available for some electric water heaters that will allow you to control the water’s temperature remotely.

This can be used to customize a schedule to ensure hot water is only available when required.

This will save money on your energy bill. An alert will also be sent if the amount of hot water is low.

Premium Electronic Gas Valve

Some gas water heaters nowadays include an advanced electronic gas valve that has fewer moving parts than conventional mechanical gas valves. This provides more accurate and reliable performance for faster hot water recovery and improved temperature control.

This type of valve is powered by a thermopile which converts thermal energy into electrical energy. Water heater Installation is easy as an external power source is not needed to start the gas ignition process.

Anti-Scale Devices: Are They Worth It?

Several brands advertise a feature that they claim reduces the buildup of mineral scale in the bottom of the tank. This might be done by agitating the water, thicker elements or special metal alloys.

Although scale buildup will shorten a heating element’s life, the real problem is that it will cost more to heat the water. Rather than relying on the water heater to do a job it isn’t very well designed to do, the water should be treated before it gets to the heater.

To best protect your water heater’s life span and efficiency, you should use a water filtering and conditioning system to prevent mineral scale build up.


The warranty for a water heater is typically between 3 and 12 years. Although longer-warranty models are usually a bit more expensive, they also have higher quality heating elements or bigger burners. They also use thicker insulation to reduce heat loss.

Your homeowners insurance won’t pay for damages caused by water heaters that are not installed by a professional. Also, nearly all water heater manufactures require licensed professionals to do the installation.

Glass-Lined Tanks For Long Life Reliability

These tanks have been designed to minimize corrosion, which prevents water leaks. Also, the tanks last longer, which should result in having a longer warranty.

Plastic vs Brass Drain Valves

Drain valves are located at the base of a water heater and are used to connect a hose to drain the heater. Brass drain valves are more durable than plastic ones.

Digital Displays For Convenience

Electronic displays assist in monitoring performance levels and customizing operation. Some heat pump hybrid water heaters allows you to set a vacation mode that improves efficiency when you’re not at home.

These will take the place of the thermostat style timers that do the same thing for less sophisticated heater systems.

Useful Water Heater Accessories

The efficiency and safety of a water heater can be improved by using some of the many accessories available.

Expansion Tanks

These expansion tanks are required in some cities, but should be required everywhere. It’s just a small tank that is added to the water pipe as the water leaves the water heater.

It simply prevents excess water pressure, due to the expansion of water when heated. That unwanted excess pressure can cause a water leak that would be disastrous.

Also, it prevents water hammer – which results in that clanking noise water pipes make when water is turned on or off or the toilet is flushed.

AMTROL ST-5 Thermal Expansion Tank

Prevents “water hammer” and leaks due to over pressurization. Click Here 


Timers are used to supply electricity to the water heater only at specified times. This will allow you to reduce energy consumption and save money by only switching the water heater on when needed.

This is the same as using the newer furnace thermostats that can be programmed for when you are at work or on vacation.

Water Heater Pans

These pans are located under the heater and will prevent further damage by collecting any water released by leaks or overflows. Pans have an opening on the side where a drain hose can be connected to divert any overflow water.

In my opinion, water heater pans  are a necessity. Even a small leak can cause thousands of dollars in repairs to flooring and ceilings.

Water Alarms – Better Than Nothing

Alarms can be located either in the pan or on the floor next to the water heater. When a heater overflows or leaks, the alarm will give an audible alarm to indicate that there is a problem.

If you are not using the water heater pans, just mentioned, this will tell you that there is a problem, if it isn’t already very obvious. However, you will have to repair the damage that has already happened. If you are on vacation, you won’t be hearing the alarm until you already have severe water damage.

Water Heater Blankets

These blankets have been designed to fit over the heater and add to its ability to insulate.

They take up a little more room space, because they wrap around the heater. However, they will pay for themselves many times over.

Insulating blankets work best with water heaters that are located in unheated spaces such as garages.

Water Heater Blanket Insulation

Save money by wrapping the water heater in extra insulation. Click Here 

Water Heater Stands

These are used to lift units powered by gas off the ground to reduce the hazard of fire should flammable liquid be spilt nearby. If an old water heater is being replaced and a stand added with the new one, it will affect all venting, plumbing and other measurements, and will probably require the services of a local plumber.

Water Heater Buying Guide Conclusions

If your main goal is to save money when replacing a water heater, then you should buy exactly what you already have. That way you won’t have to upgrade your wiring or gas pipe system, which can be very expensive.

Also, keep in mind that new tank style water heaters are now taller and wider than what they are replacing, because of increased insulation.

If you are doing a major remodeling make-over, then consider a tankless water heater. That’s because you can easily increase electric wire sizes or natural gas lines when you have access to the insides of walls and floors.

If your budget has some extra dollars in it, go with the extremely efficient heat pumps or condensing heaters.

Building a new house? Tankless water heaters, especially the gas powered condensing ones are an excellent choice. Other very good choices are condensing boiler furnace/water heater combined together. They are often referred to as a “combi“.

This water heater buying guide is a work in progress and will be updated and expanded in the future.

Rheem combi boiler

Take a look at this combi water heater – Click Here

Tankless Water Heater Guide: Best or Worst Idea Ever?

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Last update on 2024-05-24 / Affiliate links / Images from Amazon Product Advertising API

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