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 needed. These water heaters are among the most affordable options due to their prevalence. These conventional heaters have a large insulated tank that can hold between 30 and 80 gallons of water, depending on the size of the tank.

Typically, tank water heaters are powered by electricity or natural gas, though some models may use liquid propane or oil. Cold water enters the tank and is heated to a set temperature. Once the water inside the tank reaches 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 hot water supply. 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 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 on demand.

Tankless water heaters provide an endless hot water supply, take up less space than tank water heaters, and are typically more efficient. They are expensive to buy and install, so a tankless system may not be the best option if price is a concern.

Point-of-Use Water Heater

Best for: Providing hot water to a single plumbing fixture

Point-of-use water heaters provide hot water to one plumbing fixture, such as a shower or kitchen sink. Tanked point-of-use water heaters typically have a small storage tank to prepare a limited amount of water. 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 sun's energy to heat the water. Similar to conventional tank water heaters, solar water heaters have a large insulated tank where the water is stored until it is ready to be used. The main difference is 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 solar panels or installed elsewhere in the home. They mainly rely on solar power but usually have a gas or electric backup fuel system to ensure you always have access to hot water. These systems are less effective in areas with heavy snowfall because the snow blocks the solar panels from collecting energy.

Solar water heaters are more expensive to install than conventional water heater systems, though the yearly energy costs to operate them 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 mounted to the top of the tank, which takes up more space than a conventional tank water heater. Additionally, this type of water heater is more expensive than a conventional tank heater and relies 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 designed to heat the home and the water used at various plumbing fixtures throughout the house. The boiler system distributes hot water via baseboard radiators or radiant floor systems. Depending on the specific system, steam may be distributed to steam radiators to heat the home.

The system heats water 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 requiring a high hot water volume during peak periods.

Condensing Water Heater

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

A condensing water heater is fueled by unused waste gas fumes produced by the home's natural gas system. When the furnace burns natural gas, 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.

These systems are best paired with homes that use natural gas as a primary year-round fuel source. Using waste gas instead of electricity or natural gas keeps yearly utility bills low and offers high energy efficiency. However, these systems are typically only available as large units, which cost more than the average conventional tank water heater.