Tankless vs. Tank Water Heaters: Which is Better?

Tankless vs. tank water heater comparison – which is better? A million dollar question.

Are you looking to buy a new water heater but not sure whether to get a tankless or regular type with the storage tank?

Here, we will compare tankless vs. tank type  and examine differences, advantages, disadvantages, costs, and benefits, so you can make an informed decision and select the best water heater for your home.

There are several factors that will determine which type and model to get, including your family size, costs, efficiency, water usage, reliability, durability, warranty, and other more or less essential elements.

Tankless Vs. Tank Water Heaters: Things To Consider

Tank type

Comparing Purchase And Installation Costs

Buying a tankless water heater will cost you more than a regular type, but tankless can save you more over the life because they last longer (over 20 years) and have a better warranty (15 years).

According to Home Depot, regular water heaters with a storage tank and powered by natural gas or propane can cost you between $900 and $1300, while the installation cost is between $1000 and $3000.

The purchase price of the tankless with installation and material can cost you between $2000 and $6000. This is also an estimation from homedepot.com.

An average price for a storage water tank is around $1000 or higher for condensing models. According to homeadvisor.com, the installation cost is from $800 to $1500, depending on how much your plumber charges, which can go from $45 to $150 per hour.

Gas tankless water heaters go from $600 for non-condensing to over $2000 for condensing models, while the average installation cost is around $2000.

Important: If you require professional assistance, contact a local water heater expert today!

How Tankless Water Heaters Work

Tankless water heaters are designed to heat water on demand. They don’t store water in a tank but heat water as it passes through the heat exchanger, using natural gas, propane, or electricity. With the tankless, you will heat only water you need, so water is always fresh, energy is used only when your turn on the tap, and there are no standby heat losses as found in the standard storage tank type.

How Tank Water Heaters Work

Tank-type water heaters are considered regular or traditional because they have been present in North American homes for over a hundred years, making them the industry standard. They are equipped with water storage tanks with capacities ranging from 30 to over 80 gallons when used as whole-house models.

Water is heated by using natural gas, propane, oil, solar, and electricity. As opposed to tankless, tank-type heaters heat water even if you don’t use it, maintaining the water temperature set on the heater’s .

You might also like: Heat pump vs. gas water heater

Compare Tankless Vs. Tank Water Heater Benefits

Since a water heater can be a costly investment and as you will be living with one for many years, choose wisely. Here are some important factors to consider:

Energy Efficiency

Most tankless water heaters are energy-efficient and Energy Star approved, while only some are from the regular tank-type models. The efficiency goes from 0.82 for the non-condensing tankless to 0.96 for condensing models, where the best models such as Rinnai RUR199 and Takagi T-H3 can provide the highest savings and lowest emission.

Tankless heats water on demand, so there is no need to store water and heat. If you buy a model with a recirculation pump, such as any model from the Rinnai RUR series, hot water is available instantaneously, so no more waiting for a warm shower. And no more energy and water waste.

As hot water is heated on demand, it is supplied in a continuous flow with no interruption (as long as you have water, electricity, and gas). Sometimes, when other applications are running simultaneously, you might notice temperature fluctuation. Still, if you buy a tankless such as Rinnai or Takagi mentioned above, your comfort won’t be compromised, and you will be happy.

In addition, regular water heaters with the storage tanks such as AO Smith Vertex and Polaris are also ultra-efficient,  and thanks to the condensing technology, are capable of producing hot water with an efficiency of over 90%.

How Tankless Can Save You Money

Since most tankless water heaters have high energy factors, and as the condensing models use exhaust gases to preheat water and reduce energy loss, it is evident that tankless can save you money. Rinnai manufacturer states that savings are approximately 40% when compared to gas, or even more when compared to electric tank-type models.

As per Rinnai manufacturer, annual operating costs for one standard 50-gal tank-type heater are around $300 while for tankless around $200. In general, you could expect savings from 30-70%, depending on your usage habits and energy prices. Savings are even greater with households with larger families or higher demand. Additional savings such as government rebates are available to qualified tankless models.

According to energy.gov, tankless heaters can be 24% to 34% more efficient than the tank-type.

You can use this calculator to compare water heating costs for various systems.

Tankless Are Small, Saving You A Lot Of Space

Tankless is small and lightweight, so they require less space. For example, Noritz NRCP1112 comes with a size of approximately 28” X18” X9” and weighs around 50 lbs.

This makes tankless easy to install on the wall, freeing up the space underneath the heater for other use.

In addition, gas tankless models can be installed indoors or outdoors and in any part of the house, giving you more installation flexibility.

At the same time, bulky and heavy tank water heaters usually come with the approximate size of 63” in height, 21” in diameter, and 140 lbs in weight, and that requires a dedicated room and some floor space for the installation.

They are meant for indoor installation only and mainly in the utility room or garage.

Tankless Is Modern, While Tank-Type Heaters Are Old-Fashioned

Tank water heaters are bulky and not attractive that deserve spots somewhere behind the door and in a designated room.

Tankless are modern, sleek, look nice, and can be installed even in the kitchen or a bathroom. At the same time, tankless is much more advanced. They have many sensors, a built-in computer, a user-friendly control panel, a remote controller, and advanced electronics for safe, reliable, and precise control. Tank-type heaters are mostly forgotten in our basements and utility rooms until something happens.

Tankless Last Longer And Have A Better Warranty

What would you rather pick; a 15-year or 6-year warranty, over 20 or 10 years lifetime?

Yes, tankless can last pretty long, and what is important is that you can replace any of its components.

According to Noritz manufacturer, nearly 3 of 4 tank-type water heaters fail due to tank bursting or leaking, which results in the unit replacement. If any tankless element leaks or breaks, that part can be easily replaced.

How To Select A Water Heater: Sizing Tips

Sizing a Tankless

Tankless water heaters are selected based on the water flow in gallons per minute (GPM). You need to determine the maximum number of devices you want to run.

Temperature rise is another important factor, and it depends on the temperature of the incoming groundwater and set temperature output.

The highest water flow I have seen on the residential tankless water heaters is around 11 GPM, found on Noritz.

It is important to understand that you cannot run out of hot water no matter the water flow or temperature rise with the tankless. The problem here is if you run more applications, the tankless might struggle to keep up with demand unless you install more units.

Sizing A Tank Water Heater

When selecting a tank-type water heater, see the first-hour rate or how many gallons of hot water one unit can supply per hour. Get a model that can produce enough hot water during the highest demand.

Recovery rate is also vital as it shows the amount of hot water your water heater can deliver in a given period of time or how fast it can heat water.

Keep in mind that even you choose the right capacity or even oversize the unit, your storage tank-type unit can run out of hot water.

Feature Highlights – Pros And Cons


  • Modern and advanced
  • Continuous supply
  • Fresh water
  • Higher efficiency
  • Small
  • High initial cost
  • Low operating cost
  • Need electricity
  • Self-diagnostic
  • Low emission
  • Rebates and grants
  • Warranty 10-15 years
  • It lasts over 20 years


  • Old technology
  • Capacity is limited
  • Stagnant water
  • Lower efficiency
  • Bulky
  • Low cost
  • Higher cost
  • No electricity required
  • No diagnostics
  • Warranty 6-10 years
  • It lasts up to 10-15 years

When The Tankless Is The Right Choice

  • You have a large family or people staying often
  • If you often run out of hot water
  • Gas bills are too high
  • If you have a smaller home where every inch of the floor space counts
  • You are away from your home often
  • If you prefer a greener choice

When The Tank-Type Is The Right Choice

  • You are on a budget
  • If your household is not too big (demand is not too high)
  • You are generally at home during the day and will be using hot water often
  • You have a dedicated room for a water heater, such as the basement, utility room, or garage

Are Tankless Water Heaters Better Than A Tank-Type?

Buy a tankless water heater if you have a large family and high demand for hot water, have limited living space, are planning to stay in your home for many years, are not on a budget, prefer on-demand heating, endless supply, and advanced control and diagnostics.

For those who would prefer a simple design, lower cost, proven technology, wide and established service network, and would like to have hot water no matter of the required water flow, get a traditional tank-type water heater.

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