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What Type of Water Heater is Right for Your Home

Posted by Joey Haack on Jun 30, 2021 11:15:00 AM | Updated on 03/08/22 12:08 PM


Your water heater is the second highest consumer of energy in the home, so you want a water heater that’s energy efficient, cost effective, and dependable. If you’re considering replacing your water heater, there are many factors to weigh, including the type of heater you’ll purchase and what features it should include.

Types of Water Heaters

Tankless (On-Demand) 

On-demand heaters heat water only when needed. Water passes through the unit, where it is heated, before coming out of the faucet. While the amount of hot water you receive isn’t dependent upon the size of a tank, it is limited by the amount of water a tankless unit can heat at one time. As a result, you may not be able to deliver hot water to multiple appliances and faucets simultaneously. A gas-fueled tankless heater can generally provide hot water more quickly than an electric one due to the fact that gas water heaters produce their maximum heat as soon as they are activated, whereas electric units require time to heat. Tankless heaters have a relatively high up-front cost, which may be offset by the energy-efficiency savings.


Conventional (Storage Tank)

The most common type of water heater utilizes a storage tank. Conventional water heaters have an insulated storage tank where water is heated. The downside of conventional water heaters is that the water in the tank is perpetually heated, even when it’s not being used. As a result, conventional units are less energy-efficient than other types. To reduce energy waste in a conventional water heater, it’s important to find a tank that is properly sized for your home and usage.


Heat Pump (Hybrid)

Heat pump water heaters are a newer option. Like the heat pumps that can heat and cool our homes, these units extract heat from either the air or ground to heat water. If you live in an area with harsher winters, however, a heat pump water heater may not deliver energy savings. Your HVAC system is using energy to heat your home, while your water heating system is taking that heat right back out. Due to this, the room that your heater is in will not maintain heat like other areas of your home, so be sure that it is stored in a conditioned room apart from any of your living spaces.


Features to Consider

When shopping for a new water heater, consider these important features:


Fuel Type

Selecting the fuel type that your water heater will run on will determine costs as well as energy efficiency. Once you determine what fuel options are available for you, you can begin to break down the pros and cons of each type. It’s also a good idea to compare fuel costs to determine which would be the best for your home and budget.



Conventional, tankless, and heat pump heaters all come in electric-powered models. However, electric tanks generally use more energy than other fuel types, which are able to heat a tank more efficiently. Electricity costs more to run than other fuel types such as propane and gas, but electric water heaters are less expensive upfront.


Geothermal or Solar

Geothermal and solar units use energy from the earth and sun, respectively. Installation is more complex and, therefore, more expensive. If you are building a new home, however, these may be viable, cost-effective options.


Natural Gas

Natural gas is available in many areas throughout the United States and can fuel both conventional and tankless water heaters. They are more expensive to install than electric, but they are also more energy-efficient.



Oil fuel is similar to gas and propane, but it combines oil and air to create a mist that ignites. It can be a good option if natural gas is not available in your area. Oil-fueled water heaters can retain a larger quantity of hot water that is readily available. While natural gas is more efficient, oil-fueled water heaters have a larger capacity. However, the lifespan of an oil-fueled system can be shorter due to the complexity of the burner.



Like oil, propane is typically used when natural gas is not available. Propane is stored in a tank on your home’s property and can be used with both conventional and tankless heaters.



You need to find a water heater that is properly sized to serve your home. Size impacts the efficiency of your system. The process of determining the right size for your water heater varies depending on what type you’re buying. Tankless heaters are labeled with their maximum flow rate (gallons per minute) and temperature rise (difference between incoming water temperature and desired temperature). For tank water heaters, you can use the first hour rating—the number of gallons of hot water the heater can supply per hour—to determine the size that you need. A professional contractor can help you determine the appropriate size for your home.


Energy Efficiency

Energy efficiency should be a main consideration anytime you’re shopping for a new appliance. Because a water heater accounts for a large portion of home energy usage, efficiency is key. Upgrading to a more energy-efficient heater can save you hundreds of dollars per year. Tankless water heaters are the most efficient because they only heat water as needed.  



Warranties for water heaters typically range from 3 to 12 years. When looking for water heaters, you should choose the one with the longest warranty. Longer-warranty models usually have features such as thicker insulation, which reduces heat loss and increases efficiency.

If you’re building a new home or simply upgrading your water heater, a trusted professional in your area can help you understand all your options and choose the best solution for your home, family, and usage needs. Subscribe to our blog for more tips!

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Topics: maintenance, home improvements