The Ultimate Water Heater Guide

The Ultimate Water Heater Guide

Imagine turning on your faucet and waiting for hot water that never comes. Cold showers in the middle of winter, chilly water that won’t clean dishes or clothes—this is how daily life would be without hot water heaters.


We usually don’t think about our hot water system until it breaks and we’re left with cold water and/or puddles in the basement. It's then that we remember that water heating is a necessity. If you’re here precisely because you need a new water heater, we’ll tell you all you need to know in this water heater buying guide.


Types of Water Heaters

If you’ve only ever had one type of water heater, you may be surprised to learn that you have different options.


Storage Tank Water Heaters

Storage tank water heaters are the oldest and most common type. They store hot water in a large, 40-80-gallon tank. Cold water enters from the top and flows through a tube to the bottom.

  • In natural gas- or propane-powered units, a burner heats the water at the bottom of the tank. The hot water then exits through a pipe on top of the tank.
  • In electric-powered units, heating elements transfer heat to the stored water via conduction, like in a coffee maker.


Tankless Water Heaters

Tankless water heaters heat flowing water on-demand. As a result, they do not store water and are much more compact and energy-efficient. They come in natural gas, propane, and electric varieties. Below, you can see the internal components that go inside a condensing gas tankless water heater. 


What is inside of a tankless water heater


When you turn on a water faucet in your home, a flow sensor in the tankless unit detects water flow. A circuit board then activates a heat exchanger inside the unit, which heats cold water flowing past it.


Unlike storage tank units, tankless water heaters bring water in and move it out from the bottom of the tank, although certain models on the market offer top-mount connections to simplify switching from tank to tankless. Some tankless water heaters even double as boilers and are called combination units.


Indirect Water Heaters

Weil-McLain Aqua Plus 45 - 39.9 Gal. Indirect Water HeaterIndirect-fired water heaters are so-called because they do not directly heat the water. Instead, they are connected to a boiler that circulates hot water into a coil inside the indirect water heater.


Cold water enters the indirect water heater tank and is heated by the hot water circulating through the inside coil. The hot water is then sent to your fixtures.


Heat Pump Water Heaters

A.O. Smith 70 Gal. First Hour Delivery 3.42 UEF Heat Pump Water HeaterHeat pump water heaters are among the most efficient on the market. They work like air conditioners, pulling heat from the surrounding space. Instead of dissipating the heat outside, though, heat pump water heaters use it to heat the stored water. In addition to heating the water, these units also help cool the room.


Naturally, heat pump water heaters work best in warm climates because there is plentiful warm air to pull. Many models can switch to electric mode in case there isn’t enough warm air in the room.


Point-of-Use Water Heaters

Bosch 4 Gallon Point of Use Mini Tank Electric Water HeaterPoint-of-use water heaters heat water at or near the fixture, typically mounted under a sink or next to a shower. As a result, they can provide hot water very quickly when compared to whole-house options.


They come in gas, electric, tank, and tankless models. Think of them as mini tank or tankless water heaters. They are most commonly installed in commercial or large residential applications that are difficult for a single, central water heater to handle.


What to Look for in a Hot Water Heater?

There are three main factors to consider when shopping for a water heater: application, efficiency, and size.



First, you need to answer the question, “where is this water heater going?” For example, do you have the physical space to have a large storage tank? Is your climate warm enough to efficiently sustain a heat pump water heater?


Rinnai tankless water heater applicationFor some water heaters, you need other components. For example, you cannot use an indirect water heater unless you already have a boiler system in your house. Tankless gas hot water heaters may require you to upsize your gas line because they need more energy to heat water.


If you own a large home or building, do you want to go with a single, centralized water heater or install multiple point-of-use water heaters? These are all questions to think about when choosing what kind of water heater will work best for you.



Water heater efficiency is noted by its Uniform Energy Factor (UEF) rating, which measures what percentage of the unit’s energy goes into heating the water versus being exhausted out the flue.


Water heater efficiencyFor example, a 0.95 UEF water heater is highly efficient—95% of its energy goes into heating the water.  A 0.80 UEF water heater would be considered lower efficiency since only 80% of its energy heats the water.


High-efficiency water heaters use condensing technology, which consists of a secondary heat exchanger that captures heat from the exhaust before it exits the flue. Not only does this recover precious heat, but it makes the exhaust gases cooler, allowing you to use less expensive PVC and DuraVent venting, rather than expensive stainless steel.


The benefits of high-efficiency units include energy bill savings and venting materials, although you will pay more upfront. Both storage tank and tankless types have high efficiency and lower efficiency models. Indirect water heaters are naturally highly efficient since they use the heat already being produced by your boiler. Similarly, heat pump water heaters are extremely efficient as they use the existing heat in the room.



If your water heater is too small for your home, you’ll be dealing with a lot of cold showers because you won’t have enough hot water. That’s why sizing matters.


Sizing a tankless water heater will depend on what type you want. For tankless water heaters, you need to figure out the following:

  1. Flow rate, or how quickly water is flowing in your home across all the fixtures you would be using at the same time. This tells you how much water you would need to heat.
  2. Temperature rise, or the difference in temperature between incoming cold water and outgoing hot water. Suppose you want to heat your water to 120° F. It takes more energy to accomplish this if the incoming cold water is 50° F versus 70° F. The temperature of your incoming groundwater depends on your climate.


Storage tank water heaters, which include heat pump and indirect types, use first-hour rating for sizing. The first-hour rating is how many gallons of hot water your home would need in one hour at maximum demand. For example, if your family uses up to 40 gallons of hot water in an hour, your water heater had better be holding that much. Otherwise, you need a larger one.

How Long Does a Gas Water Heater Last?

Water heaters with a storage tank typically last between 10 and 15 years. The better you maintain them with regular maintenance and tank flushing, the longer they will last.

Tankless water heaters can last 20 years or more due to fewer opportunities for corrosion and their easily replaceable, modular components. With tankless, you can replace individual parts instead of the whole unit. 


Water Heater Cost

walletAfter reading this hot water heater guide, you’re probably wondering, “what about price?” There are many variables that impact the cost, such as the water heater itself (which changes in price based on efficiency and type; gas, electric, etc) and installation.


We recommend you consider long-term costs as opposed to short term gains. Sure, going for the less expensive 0.80 UEF water heater might sound great now, but you’ll end up paying more in energy costs over its lifetime than with a higher-efficiency unit.


We don’t realize how important hot water is until we lose it. Don't wait until you start having trouble to start looking for a better unit. We’d love to discuss costs and specific options for your home with you, so please contact us at (866) 631-6389. 



NEXT: View and Shop Water Heaters





Shop Related Products
Related Articles
Learn About Home Heating Equipment
Sales Tax Guide
The Basics of Ventilation, Heating and Cooling Systems
Learn About ACWholesalers