7 Types of Water Heaters and How to Choose

Tank Water Heater

Best for: Affordable water heating with a ready supply of hot water.

Tank water heaters are designed with a heating element and a storage tank where hot water is stored until it's needed. This type of water heater is one of the most affordable options due to the prevalence of these systems in the market. These conventional heaters have a large insulated tank that can hold between 30 to 80 gallons of water, depending on the size of the tank.

Typically, tank water heaters are powered by electricity or natural gas, though there are some models that may use liquid propane or oil. As cold water enters the tank, it is heated to a set temperature. Once the water inside the tank reached the designated temperature, the water heater stops actively heating the water. When the hot water is used or enough time has passed for the water to cool, the unit will turn back on to reheat the water to the set temperature.

Tankless Water Heater

Best for: Heating cold water on demand in homes with limited space.

A tankless water heater is made to rapidly heat cold water as it passes through a short series of super-heated coils to provide an endless supply of hot water. These water heaters are less than half the size of a standard tank water heater, making them ideal options for small condos, apartments, or townhouses.

The systems can be fueled by natural gas or electricity, though the natural gas tankless heaters tend to be more efficient. A primary benefit of a tankless water heater is that it doesn't waste energy heating and reheating a tank of water. Instead, the water is only heated when it is needed.

Tankless water heaters heat water on demand to provide an endless supply of hot water. They take up less space than tank water heaters and they are typically more efficient. However, the cost to purchase and install a tankless water heater is generally higher than the cost to purchase and install a conventional tank water heater, so if price is a pressing concern, a tankless system may not be the best option.

Point-of-Use Water Heater

Best for: Providing hot water to a single plumbing fixture.

Instead of whole-home options, point-of-use water heaters only provide hot water to one plumbing fixture, such as a shower or kitchen sink. Tank point-of-use water heaters typically have a small storage tank to keep a limited amount of water ready for use. You can also find tankless point-of-use water heaters, which are great for showers because you don't need to worry about running out of hot water in the middle of a long, relaxing shower.

These systems are relatively affordable and don't take up a lot of space because they can usually be installed out of sight under the sink. The main drawback to a point-of-use system is that they are generally less efficient than most other water heater types.

Solar Water Heater

Best for: High-efficiency, renewable energy water heating.

Reduce yearly utility costs with a solar water heater that uses the energy from the sun to heat the water. Solar water heaters have a large insulated tank where the water is stored until it is ready to be used, similar to conventional tank water heaters. The main difference being that solar water heaters collect solar energy with solar panels and convert this energy into electricity to heat the water.

Solar water heaters can be mounted on the roof with the solar panels or installed elsewhere in the home. They don't solely rely on solar power, so there is usually a gas or electric back-up fuel system to ensure that you always have access to hot water. However, it's important to note that these systems are less effective in areas of the country that are prone to heavy snowfall because the snow blocks the solar panels, preventing solar energy collection.

Additionally, solar water heaters are more expensive to install than a conventional water heater systems, though the yearly energy costs to operate the water heater tend to be lower.

Hybrid Water Heater

Best for: Energy efficient whole-home water heating.

A hybrid water heater uses a heat pump system to draw heat from the ground and air to heat the water, instead of relying on a direct fuel source. This method of heating the water allows a hybrid water heater to use up to 60 percent less power than a conventional tank water heater.

The system has a large insulated storage tank and a heat pump that is mounted to the top of the tank. Due to the tank and heat pump combination, these systems take up more space than a conventional tank water heater. Additionally, this type of water heater is more expensive than a conventional tank heater and they rely heavily on ambient heat, which is why hybrid water heaters are not recommended for areas with cold climates.

Combination Boiler Water Heater

Best for: Affordable, efficient water heating in homes with space limitations.

A combination boiler water heater is a single unit is designed to heat the home and heat the water that is used at various plumbing fixtures throughout the home. The boiler system distributes hot water via baseboard radiators or radiant floor systems. Depending on the specific system, it may also distribute steam to steam radiators to heat the home.

The system also heats water for use at nearby sinks, showers, and appliances. Combination boiler water heaters are compact and have low operating costs, making them a great option for smaller homes that require year-round heating. However, they aren't a good choice for larger families that require a high volume of hot water during peak periods.

Condensing Water Heater

Best for: High energy efficiency, low operating costs, and environmentally friendly water heating.

A condensing water heater takes advantage of the unused waste gas fumes produced by the home's natural gas system. When natural gas is burned by the furnace, the heated waste gas is funneled into a coil at the bottom of the water heater tank to heat the water stored inside the tank.

Due to the reliance on waste gas, these systems are best paired with homes that use natural gas as a primary source for year-round heating and cooking. By using the waste gas instead of electricity or natural gas, condensing water heaters can keep yearly utility bills low and offer a high level of energy efficiency. However, these systems are typically only available as large units, which cost more than the average conventional tank water heater.