Tankless Water Heater Installation 101

By Kelly Boyer Sagert | Advertiser Disclosure

Tankless hot water heaters don’t have tanks that store gallons of hot water like a traditional water heater. Instead, this appliance directly heats water as needed, rightly being referred to as on-demand, demand-type, and instantaneous water heaters.

Is a tankless model right for you? Keep reading to learn about the pros and cons of a tankless water heater and what the installation process looks like to help you make an informed decision.

Pros and cons of a tankless water heater

Perhaps the two most common benefits of a tankless water heater are that they supply a continuous source of hot water without the energy waste connected with traditional models, ultimately saving you money over the long-term. Here are a few additional advantages:

  • Energy-efficient—According to the U.S. Department of Energy, tankless units can be 24%–34% more energy-efficient than those with storage tanks in homes using 41 or fewer gallons of hot water daily. By installing a tankless water heater unit in your home, you could experience energy savings that range between 27%–50%.
  • Increases money savings—When you use a tankless water heater, you can save $100 or more annually, depending upon the amount of hot water you use. You may also benefit from an energy rebate.
  • Provides a fast supply of hot water—After the cold water in pipes is flushed out, you’ll receive a steady stream of hot water. With storage tanks, hot water is eventually used up, but tankless models don’t rely upon storage capacity.
  • Longer-lasting than other water heaters—Quality storage water heaters can last a decade, while a tankless model can last twice as long. In general, tankless water heaters also come with longer warranties.
  • Has a space-saving design—These units need less space than traditional storage models, which could be a big purchasing factor for those who live in smaller homes.

Though a tankless water heater does have its benefits, it also comes with a few disadvantages:

  • High upfront costs—Purchase prices are higher and, because installation is more specialized, so are labor costs. This means it may take years to recoup costs through energy savings.
  • Special venting requirements—Some tankless water heaters require special venting requirements and, for gas models, the gas vent pipe needed is usually larger and more expensive than electric models. Gas lines may also need to be rerouted, so call your gas company to help out with this.
  • Annual maintenance—These units should be flushed out once a year to reduce mineral buildup.
  • Inconsistent delivery—Occasionally, a tankless water heater can deliver inconsistent temperatures, especially if hot water is in demand in more than one place at once.

Types of tankless water heaters

There are two main types of tankless water heaters: electric and gas.

  • Gas units are more expensive than electric units (sometimes twice as much), and installation costs are higher.
  • Tankless models running on gas are more complicated to install and typically require new gas pipes and venting systems.
  • Electric tankless water heaters are much smaller than gas units and don’t need ventilation.
  • Electric units are more efficient to run.

What to consider before buying a tankless water heater

Before you purchase a tankless water heater, there are a few factors you should consider:

Single-point vs. whole house

When considering a tankless system, you can choose a water heater that serves the entire house or strategically buy units for individual zones. Something that can help you make your decision is how the house is structured and how easily new electric or gas lines can be run in designated zones.

Often, new lines aren’t practical, making a whole house unit the best choice. If you’re building a new home, you’ve likely got more freedom to run electric or gas lines to accommodate zoned tankless units—and, if the home is large enough with a significant need for hot water, zoned water heaters can be more efficient and less wasteful.

Special features

Going beyond the basics, some tankless models use a second heater exchanger for even higher energy efficiency—these are called condensing heaters. They’re more expensive than other tankless heaters and will need a neutralizing cartridge.

There are also some units with a recirculation pump, which saves water and provides hot water even more quickly than condensing water heaters. Another feature you may want to look out for is smartphone capabilities—if you have a smart tankless unit, you can typically adjust the water temperature from your phone.

Solar power

You can use solar energy to power a tankless water heater. This can be the system of choice for people who want environmentally friendly ways to consistently heat water.

Size considerations

To choose the right size water heater, consider your water usage needs and the temperature of water you consistently want, and then reverse engineer the size of the unit needed to provide for your needs. You may want to consult with an expert to make sure you get the right size without overdoing it. 

How much does it cost to install a tankless water heater?

Overall, the national average for installing a whole-house tankless water heater ranges between $1,000–$3,000. The total price will vary based on the following factors:

  • Labor costs for old system removal—Whether you perform the installation yourself or hire a professional, you’ll have to factor in the costs associated with removing your old appliance.
  • Labor costs for the installation—Installation time can start at two hours for an electric unit and seven or eight hours for a gas unit that needs updated plumbing and a new gas line. Plumbers can charge between $45–$150 per hour, with the average being $85 per hour. This means that typical labor costs for an electric tankless water heater would be $90–$450. A gas unit may have labor charges of $1,200 plus an extra $500 for a new gas line. Try budgeting at least $250–$500 for miscellaneous work or extra materials.
  • Labor costs for drywall and/or carpentry work—Sometimes, walls need to be opened or access doors need to be added during a tankless water heater installation. If you need drywall and finishing work, this can be up to $200. If you need carpentry work, figure in $100–$300.
  • Annual maintenance costs—This typically ranges between $45–$130 per year and doesn’t include annual fuel costs (which is around $200). Because the average savings of a tankless unit over a storage one is about $100, maintenance costs can be cancelled out by energy cost savings.

How to install a tankless water heater

Installing a water heater is a complex job recommended for a professional. Call your local plumber and schedule a time for your tankless water heater installation. Because code regulations vary by location, ask your local government about permit requirements and local codes related to tankless water heater installation.


  • Power drill
  • Adjustable wrenches
  • Screwdrivers
  • Reciprocating saw
  • Hammer
  • Nails
  • Tankless unit
  • Pipe
  • Valves
  • Gas connectors/fittings
  • Sealants
  • Wood for a platform

Though a professional will be installing the water heater for you, here’s an overview of the installation steps:

  1. Remove the old water heater from its existing location.
  2. Install an appropriately sized gas line (if you’re installing a gas water heater).
  3. Run a black pipe or flexible gas line to where the new water heater will be attached.
  4. Install new water lines that connect to your tankless water heater.
  5. Create a wooden platform that allows you to mount your new unit about four inches from the wall and attach the water heater to the wooden platform.
  6. Follow the owner’s manual to attach the gas shut-off valve and sediment trap together. Then, attach the gas pipe or gas supply line to the shut-off valve.
  7. Connect the water supply line, following the owner’s manual.
  8. Turn on the water and gas supply, checking for leaks.
  9. Install venting and then test the tankless water heater. You can use a gas sniffer to check for leaks.

How a tankless water heater works

Tankless water heaters have a flow sensing device that, when a hot water tap is opened, the sensor is activated. Water is then heated by gas, electric, or solar energy, and then delivered to the open faucet. Once the faucet is closed, the sensor stops working and the heating process ends.

Frequently asked questions

How long can a tankless water heater last?

On average, a tankless water heater can last for about 20 years.

How much does a tankless water heater cost?

Tankless water heater prices range between $1,000–$3,000, but these costs will vary based on the type of heater you install, installation and labor, and routine maintenance.

How do you maintain a tankless water heater?

Maintenance manuals with your unit will provide specific instructions. In general, this involves regularly cleaning the water filter and the air filter, and flushing out the unit to remove mineral deposits.

Where can you buy tankless water heaters?

You can buy tankless units at home improvement stores, online retailers, big box stores, and other locations that sell storage water heaters.

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