Tankless vs. Tank Water Heaters: Which Is Right for Your Home?

When it’s time to replace a water heater, the first decision is usually between a traditional tank and a tankless (on-demand) unit. Both will keep hot water flowing — the difference is in how, and when, they heat it.

How each works

A tank water heater keeps a reservoir of water hot and ready, reheating it as needed. A tankless water heater heats water only when you turn on a tap, with no standing tank to maintain.

Comparing the two

Tankless water heaters

• Heat water on demand, so they don’t lose energy keeping a tank warm
• Take up less space
• Can provide a continuous supply of hot water
• Usually cost more up front to purchase and install

Tank water heaters

• Typically lower up-front cost
• Familiar, simple technology
• Can deliver a large volume of hot water at once, then need time to recover
• Lose some energy maintaining the tank temperature

Choosing for your household

The best fit depends on your home’s hot-water demand, the number of bathrooms, your space, and your budget. A household that runs several fixtures at once has different needs than a smaller home. An installer can help you weigh the up-front cost against long-term efficiency and recommend the right capacity — and confirm whether any efficiency rebates apply to the model you choose.