Tankless Water Heater: What Is It and Should You Buy One? - Quicken Loans Zing BlogTankless, or on-demand, water heaters hit the market a few years ago as an energy efficient alternative to the traditional gas heated water tanks. These systems heat up water as needed rather than storing it in a tank. Energy.gov notes, “They don’t produce the standby energy losses associated with storage water heaters, which can save you money.” Plus they save a ton of space since there’s no massive storage vessel for lava hot water.

Sounds like a good deal, right? Well, before you jump on the bandwagon, let’s take a closer look at how on-demand water heaters work, how much money they could save you, and if they’re really worth the money.

How Do On-Demand Water Heaters Work?

It’s pretty simple; water comes into your home and is heated via elements inside the system. Then it winds through the pipes to the faucet or appliance of choice.

Most tankless systems have the capacity to provide two to five gallons of warm water per minute. Energy.gov says, “For homes that use 41 gallons or less of hot water daily, on-demand water heaters can be 24%–34% more energy efficient than conventional water heaters.” They add that families can expect to save up to $100 on their energy bill each year by installing a tankless water heater.

Which Tankless Water Heater Is Right for My Home?

If you decide to purchase an on-demand water heater, you’ll need to think about a few things when you research which one is right for your home:

  • Take a look at your past water bills to see how much water you use on average. Most systems will tell you the capacity they can handle.
  • Identify whether you want it to be gas or electric.
  • Learn at what temperature the water is coming into your home.
  • Decide how warm you want your water to be when you want to use it.

Mother Earth News notes that if the difference between the water coming into your home and the water you want to use is 45 degrees, it’ll take a large on-demand system to raise the water temperature. Either you’ll have to re-evaluate your needs, or consider purchasing an extra tankless system to support the first.

Is an On-Demand Water Heater Worth the Investment?

On-demand systems can help you reduce energy costs, save space in your home, and offer warm water when you need it. If you love saving money and making energy-efficient upgrades to your home, looking into a tankless system may be right up your alley.

Last thing, I promise. Before you run out and buy your on-demand water heater, have you considered any potential drawbacks? Well, if you haven’t, Consumer Reports sure has. Here’s a short list of problems they found with tankless water heaters:

  • Many people reported inconsistent water temperature.
  • The initial purchase price is high.
  • This type of water heater needs constant maintenance.
  • If it does break, it costs more to fix.

Would I personally purchase an on-demand hot water heater? Despite some of the drawbacks above, I’d probably purchase one if my current water heater died and I had to replace it.

However, since my water heater is brand new, I’m not running out to purchase a tankless water heater tomorrow. So, if you just bought a new water heater, stick with it for a while, and start putting money aside for an on-demand water heater in the future. The other benefit of waiting until later is that they’ll probably be more efficient and cheaper down the road.

Would you consider purchasing an on-demand water heater in the future? Share your thoughts with other Zing readers!


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This Post Has 6 Comments

  1. When talking to my customers about the differences between the two I somehow have trouble getting the point accross… (english is not my first language) I will be saving this article for the next time I have to explain the difference. Thanks Krissy! These are great points you made

  2. Andrew is pretty much right. But you can’t just let anyone’s effort dis-appreciated this way. This was helping for me. And it will be for more people, too. Tankless water heaters are a necessity of our lives actually.

    Steve Dune.


  3. Great points, Jim and Andrew!

    Jim, I’m not sure if you have to run a new gas line for a tankless water heater. I think it might vary from model to model. That’s definitely something you’d want to clarify before you purchase one.

    As for the ROI factor, $100/year doesn’t seem to amount to much if you’re looking for instant savings. However, if you plan to stay in your home for a while, you’ll benefit in the long run. If you’re looking for immediate savings, turning down the temperature on your hot water heater or simply using less water are better options.

    As I said in my post, I’m not going to run out now and buy one right now. Like with any new product to hit the market, on-demand water heaters are a bit pricey now. Give it a year or two and prices will drop as more people purchase them.

    I still think that if you need to replace a water heater now, looking into one of these systems might be a good idea.

    Thanks for your comments. Keep ‘em coming!

  4. Krissy, when I saw the title of this post, I was prepared for the worst (I am a mechanical contractor myself) but upon reading it I was pleasantly surprised; you offer some well-researched insights. I’m not sure that I would install one in my home, however, due to the maintenance requirements and repair costs. If you look at how much you spend on water heating in a year, the savings just don’t amount to much!

  5. Just wondering about the gas supply. I’ve heard that the gas supply line would have to be increased which would be a major cost factor in an existing setup.
    The ROI of about $100/year doesn’t sound all that promising based on the initial price (plus possible new gas lines)

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