What does a tankless water heater installation involve?
If you’re not an experienced do-it-yourselfer, it’s a good idea to hire a professional to install a tankless water heater. Here’s what a licensed contractor will do:
- Assess your home’s water usage and flow rate.
- Evaluate gas or electrical supply to ensure compatibility.
- Mount the unit and connect it to plumbing and venting systems.
- Test the system to ensure optimal performance
Depending on the home’s layout and existing infrastructure, installation may take 4–8 hours and cost between $1,398–$3,895 on average1. Most dealers provide installation at discounted rates if you buy your unit through them.
How to Install a Tankless Water Heater
1. Choose your system
- Select the right size and type (electric, natural gas, or propane).
- Decide between single-room or whole-home coverage.
2. Check gas supply requirements
- Contact your gas company to confirm proper sizing.
3. Disconnect your existing water heater
- Safely shut off the gas supply.
- Remove the old unit and arrange proper disposal.
4. Install the correct venting
- Each unit requires specific venting material and placement.
- Ensure it’s installed to manufacturer specifications.
5. Ensure proper power supply
- If no outlet is nearby, you may need to wire in a new one.
- This step may require electrical experience.
6. Upgrade gas and water lines if needed
- Increased gas demands may require new gas lines.
- You may also need to install new water lines or pressure relief valves (often requires soldering).
7. Meet building code and insurance requirements
- Ensure the installation complies with local codes.
- Confirm your homeowners insurance covers DIY installations in case of errors.
Why Consider a Tankless Water Heater?
If you’re tired of running out of hot water—or just looking to upgrade to a more efficient option—a tankless water heater could be a smart move. Unlike traditional water heaters that store and heat a large tank of water around the clock, tankless systems heat water only when you need it. That means better energy efficiency, longer equipment lifespan, and hot water that doesn't run out during your shower.
But is a tankless water heater installation the right fit for your home?
How Does a Tankless Water Heater Work?
A tankless system (also known as an on-demand water heater) heats water directly as it flows through the unit, with no storage tank required. When you turn on a faucet or appliance, cold water travels through the unit’s heat exchanger and is rapidly warmed by either a gas burner or electric element.
The result? A continuous supply of hot water, without waiting for a tank to refill.
How does a tankless water heater compare to a traditional system?
While traditional tank-style systems are common in many homes, tankless models are gaining popularity for their energy savings and space-saving design. The best choice depends on your household needs, usage patterns, and budget. Here’s a side-by-side breakdown to help you compare:
|
Feature |
Tankless Water Heater |
Traditional Water Heater |
|
Heating method |
On-demand (as needed) |
Constant reheating of stored water |
|
Lifespan2 |
~20 years |
10–15 years |
|
Energy use |
Up to 24–34% more efficient3 |
Less efficient overall |
|
Installation cost |
$1,398–$3,8954 |
$600–$2,5005 |
|
Space required |
Compact, wall-mounted |
Requires storage space |
|
Hot water supply |
Continuous, on demand |
Limited to tank capacity |
What Are the Pros and Cons of a Tankless System?
Pros
Lower energy bills: You could save around 33% annually on hot water costs depending on your household size and water usage habits6.
Longer lifespan: With proper maintenance, a tankless system can last twice as long as a standard tank.7
Potential rebates: As of 2025, homeowners may qualify for up to $600 in federal tax credits for energy-efficient water heater upgrades.8
Cons
Higher upfront cost: Tankless units and installation are more expensive than tank models.
Installation requirements: Some homes may require electrical or gas system upgrades, adding to the total cost.
Key Takeaways: Is a Tankless Water Heater Right for Your Home?
Tankless systems offer a smart, efficient way to modernize your home’s hot water supply. Here’s what to remember:
- A tankless water heater installation can provide on-demand hot water, better energy efficiency, and up to twice the lifespan of traditional systems.
- While upfront costs are higher, long-term savings and space efficiency often make up for it.
- Rebates and tax credits may reduce total cost for qualifying installations.
- The right system depends on your household size, budget, and long-term plans.
- For homeowners planning to stay in place for several years, a tankless upgrade can deliver strong ROI—both in energy savings and comfort.
