Tankless Water Heaters 101 — Your Ultimate Guide 🔥💧


Tankless Water Heaters abound in today’s marketplace and consumers benefit as manufacturers compete to create better offers and keep prices low. And yet there is one drawback to all these choices: they have the effect of complicating the decision-making process, leaving many people feeling overwhelmed and confused at the prospect of purchasing one.

This guide was created to help you learn what a tankless water heater is, how it works, its benefits and limitations, and what you need to consider before you decide if one is right for you. Finally, we wrap up with some tips about how to choose from many options.

Diversified Spec. Sales, Inc. represents two types of Tankless Water Heaters: Vesta.DS, Inc. (gas) and Chronomite (electric). For this reason, the illustration images we use will be courtesy of these two manufacturers, but the basic concepts will pertain to most all tankless water heaters.

How Do Tankless Water Heaters Work?

The principle upon which tankless water heaters operate is simple. When a hot water tap is turned on, water flows through the unit and is heated by a gas burner or electric element as it passes through the system. Sensors regulate the flow and temperature of the exiting water, so it arrives at a precise level of heat. Users should never need to worry about running out of hot water because it is being created ‘on-the-fly’ instead of being drawn from a tank.

Types of Tankless Water Heaters

Non-Condensing Tankless Water Heaters

Non-Condensing tankless water heaters combust gas in a single (typically copper) heat exchanger. Hydrogen is burned as fuel, and hot exhaust gases are pushed out through the vent as steam.

Non-condensing systems adequately produce hot water but only operate at about 80% efficiency. The exhaust that leaves the system is VERY hot at around 300°F. This extreme heat requires stainless steel or thick aluminum venting material, which can be costly.

Condensing Tankless Water Heaters

Condensing tankless water heaters improve upon their non-condensing counterparts by reusing the excess exhaust heat before letting it escape through the vent. This results in much higher efficiency, with ratings at 90-98%.

Vesta’s VRS Condensing Tankless Water Heater

To capture this extra heat, they use a second heat exchanger. Both the primary and secondary heat exchangers are made of stainless steel instead of copper. This material keeps the unit safe from acidic condensation that results from gases cooling inside the unit.

Because so much extra heat energy is captured through a condensing system, the exhaust vapor is much cooler — only 100°F. This means that more affordable PVC piping can be used to vent the unit.

Hybrid Water Heaters

Vesta VH-199 Hybrid Water Heater

Tankless systems prioritize temperature and will adjust the water flow rate to maintain it. Conversely, tank systems provide steady water pressure but not continuous hot water — once your tank is depleted, there’s nothing you can do but wait.

Hybrid Water Heaters, like the Vesta VH-199, combine the benefits of the tank and tankless water heaters into one product. A Hybrid system looks similar to a tankless one, but inside you’ll find a small water tank heated by a firetube heat exchanger.

Point-Of-Use (POU) Tankless Water Heaters

Chronomite InstaFlow SR Tankless Water Heater

Point of Use (POU) tankless water heaters are small, electric, and installed as close to a fixture as possible. They quickly heat water, reducing waste by eliminating a long wait for hot water at the tap. They can be used separately or with a central water heater to boost their performance.

Gas vs. Electric: Which is Better?

So what’s better, a gas or electric tankless water heater? The answer: It depends. 

There is truly no ‘one-size-fits-all’ when it comes to tankless water heaters, and what is best for you will depend on a host of considerations like your home/building’s construction, your budget, water usage needs, and energy availability, and more.

This chart can give you an idea of how the two types compare. Still, before making a final decision, we recommend talking to a qualified service professional as installation costs vary widely depending on your unique needs.

Unit PriceApprox. $400-$2100Approx. $300-$1000
Installation CostsMore expensive, due to the complexity and venting requiredGenerally less expensive, unless an electrical system upgrade is needed.
Efficiency80-85% (non-condensing)
90-98% (condensing)
Operating CostsLower ⬇Higher ⬆
Flow Rate8 GPM (or more if required)Up to 8 GPM
MaintenanceAnnual Descaling NeededAnnual Descaling Needed
Emits Greenhouse GasesLess Environmental Impact, but not completely green.
Lifespan15-20+ years7-10 years
Typical Warranty10-15 years5-10 years

Pros and Cons of Tankless Water Heaters

Nearly Continuous Supply of Hot WaterHigher Initial Costs (than tankless) for Product and Installation
Greater Energy EfficiencyHot water is not “instant” as some advertise. It’s instant at the unit, but the user still needs to wait a few seconds.
Longevity; Units Last 2x as Long as Tank TypesWater flow is limited by units heating capacity
No Water Tank; Will Not Leak and Flood BasementWon’t produce hot water during power outages (unless a generator is used)
Space Savings; Units are compact and require less spaceHard water can cause problems if not properly maintained
Good for Large Families; Use Multiple Fixtures at Once without running out of hot waterROI. It may take more time than expected to pay for itself
Better WarrantyAnnual maintenance costs may offset energy savings

What to Consider Before Purchasing a Tankless Water Heater

Existing Conditions

The construction of your home will be a significant determining factor regarding what type of tankless water heater you select. Your home may or may not have access to natural gas, or the electrical system may not be capable of putting out enough power for an all-electric tankless water heater. Further, if you are interested in a gas-fueled solution, you must ensure that you can vent it properly.

For this reason, it’s good to consult a professional right from the start. They can help you assess your situation, answer questions you might have, and help you to create a solid game plan for moving forward.

Usage Needs — Find Your Total Flow Rate

To ensure your tankless water heater is properly sized, determine how many appliances or fixtures you want to use simultaneously. Next, add up the individual flow rate of each appliance/fixture to find your Total Flow Rate.

Typical Water Usage in GPM for Common Household Appliances & Fixtures

Appliance/FixtureFlow Rate
Kitchen Faucet2.5 GPM
Bathroom Faucet2.5 GPM
Shower Head2.5 GPM
Toilet1.6 GPF
Washing Machine4 GPM
Dishwasher3 GPM
Flow Rates are Approximations Only
Data Courtesy of: Drinking-Water.extension.org

Find Your Temperature Rise

The next thing to figure out is your Temperature Rise. This is the difference between your groundwater and your desired hot water temperature. This can vary greatly depending on where you live. This chart from Chronomite shows you the average groundwater temps in the United States:

Click Here to Download PDF Version

In Southern Michigan, for example, the groundwater temperature is 47°F. If a user wants to run their fixtures at 110°F, the water will need to be heated to 63°F to meet that goal.

Look at Manufacturer Sizing Charts

Armed with this information, your next step (assuming you have a tankless water heater you are interested in) is to refer to the Product Page on the manufacturer’s website.

For this example, Vesta’s, we’ll check out the Vesta VRP series tankless water heaters. Let’s say our needs are simple, and we just want a shower and a kitchen faucet to run simultaneously. So we’ll need a unit to handle around 5.0 GPM.

On Vesta’s VRP product page, look at the first column and find ‘Flow Rate (DWH).

From the previous example, the Temperature Rise was 63°F, so we’ll look in the third row of this section at the 67°F Temp Rise data. We can see the VRP-150 and the VRS-150 handle 4.2GPM at that temp rise, so we’ll need the next size larger.

VRP-199 and VRS-199 can comfortably handle 5.5GPM at this temp rise — this is the size we need.

A Word On Cold Climates

From this example, we can see that people living in colder climates are at a disadvantage – tankless water heaters have to work much harder to get groundwater warm.

Fear not. There are workarounds to this problem:

Controlling Flow Rates

The easiest thing to do is to regulate the water flow at your fixture. (Honestly, this is a good idea no matter what climate you live in).

You can cut your faucet’s flow rate by purchasing an inexpensive aerator. Options are available for 2.5GPM, 1.5GPM, 1.0GPM, or 0.5GPM. There are even faucets being sold today with an option for a 0.35GPM flow.

You can purchase a low-flow showerhead too. A 2.0GPM or 1.5GPM can help boost the overall performance of your tankless water system.

Point-of-Use Water Heaters

Finally, if you’re still having trouble in a cold climate, you can look into adding point-of-use water heaters. These can work with a large tankless water heater or be installed independently, as needed, on a fixture-by-fixture basis.

Have a look at Chronomite’s website to better understand what they look like and how they work.

How to Maintain a Tankless Water Heater

Tankless water heaters need to have scale and lime build-up flushed out of the system at least once per year. This “descaling” process is relatively simple and can be performed by you or a service contractor. In short, it involves pumping white distilled vinegar through your system for 1-1.5 hours. (There are many instructional videos on YouTube that can teach you how to do this if you’re a DIYer).

The Latest Developments in Tankless Water Heater Technology

Tankless Water Heater technology continues to evolve. Today’s tankless systems are more sophisticated and efficient than ever. Here are some of the latest developments.

WiFi Compatibility

The Internet of Things (IoT) increasingly allows users to communicate with their devices and harness valuable usage data to guide their habits and decision-making. These days it is not uncommon to access system controls via an app on your smartphone.

Solar Power

Due to the high demand for clean energy and a decreasing cost of solar energy, the market is seeing a growth in solar-powered devices. Tying your tankless water heater into an existing solar energy system is possible, and solar tankless water heater companies are beginning to emerge.

Cascading Systems

It is now possible to purchase Cascading Tankless Water Heater Systems for large commercial applications. These systems not only can serve large buildings but are also failsafe: you can quickly repair or service one unit while the other units in the system share the load. This ensures that a building will never be without hot water — a significant benefit indeed.

A Vesta Water Heater Cascade provides powerful redundancy for this system.

How to Choose a Tankless Water Heater

Tankless Water Heater selection can be tricky and leave you feeling trusted and overwhelmed. Here are some tips that will help guide your decision-making process:

Don’t Be in a Hurry

Your home’s comfort and efficiency investment should not be rushed. If you run into a salesman putting the pressure on, just run; they are more interested in making a quick sale and don’t have your best interest in mind. Instead, work with someone who is genuinely interested in helping you achieve the best results you can.

Give yourself time to research and take notes. Jot down any questions that might come up. After all, you’re going to spend 20+ years with your new tankless water heater — you want to make the right choice.

Do Your Homework

At this stage, your goal is to gather information. Visit manufacturer websites. Pay special attention to their price point (if listed), warranty, and any unique benefits they might offer.

As you do your research, be sure to take noteworthy, like the quality of construction. For example, Vesta has a completely Type 304 Stainless Steel Heat Exchanger, while other brands have heat exchangers made of alloys — it’s built to last. 

It may also help to make a chart. Prioritize the top 5 product benefits most important to you, and then rank each manufacturer on a scale of 1-10 in each benefit category. Add up the totals for each manufacturer when you’re finished.

Read Reviews

It pays to spend time paying attention to product reviews because people can share their first-hand experiences and may bring up concerns you hadn’t thought of. YouTube or Amazon can be a great source for customer reviews. Additionally, online forums like Quora or Reddit can be beneficial, as you can post direct questions.

Talk to a Professional

A good sales representative will not only know the ins and outs of the product they sell but also listen empathetically to your questions and suggest helpful solutions. Further, if you speak with them in person, they might be able to show you the inside of the unit or give you a working demonstration.

Likewise, an experienced contractor is an invaluable resource. They have tons of first-hand experience under their belt and can give you unique insights. They will be able to meet you at your property, assess your situation and give you an accurate estimate of how much it will cost to have a particular unit installed.


Tankless water heaters are becoming more and more popular each year due to their superior energy efficiency and ability to provide a continuous flow of hot water. They are typically more expensive to purchase and install, but their longer lifespan and energy savings can offset this cost.

Homeowners or building owners interested in tankless water heaters should take time and thoroughly research the available systems out there to find the best fit for their needs. Though the basic operating principles are generally the same, many options are available, and each manufacturer has its own unique features.

👉Please contact us if you have a general question about tankless water heaters or want to know more about Vesta™ and Chronomite®. 

Frequently Asked Questions


  • Grupa, Tom “How Much Does a Tankless Water Heater Cost” June 15, 2021, https://homeguide.com/costs/tankless-water-heater-installation-cost#average

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