Types of Water Heaters and What You Should Know

Choosing the right water heater is crucial, as it accounts for 14-18% of your annual utility bill. With a wide range of options, making a decision can be overwhelming. This guide will walk you through the various types of water heaters to help you find the perfect fit

Types of Water Heaters

1. Tank Water Heaters

Tank Water Heaters

Also known as storage water heaters, these are the most common type available. Tank water heaters consist of an insulated tank where water is heated and stored until needed. The size range is versatile, holding between 30 to 80 gallons of water. 


  • Varying capacities let you choose a tank size that suits your household’s water consumption.
  • More affordable to purchase and install.
  • Reliable, especially during colder seasons. 
  • Various energy options are available, including natural gas, electricity, propane, and solar. 


  • Tend to have higher energy consumption, which means elevated costs long-term.
  • Requires professional assistance to choose the right size.

2. Tankless Water Heaters

Tankless Water Heaters

While more expensive than traditional options, tankless water heaters are innovative systems that heat water on demand. These units use high-powered burners to heat water instantly as it flows through a network of coils.


  • The compact size makes them small-space-friendly.
  • Long lifespan with over 20 years of use. 
  • Highly energy efficient.
  • Reduced risk of bacterial growth since there’s no stored water.


  • It is more expensive to purchase and install.
  • It has a complex installation process with venting and gas lines.
  • It may not supply sufficient hot water during high-demand moments.

3. Propane Water Heaters

Propane Water Heaters

Propane water heaters use propane gas to heat water. They’re particularly useful in remote locations where natural gas is not accessible.


  • Ideal for rural or isolated locations.
  • Highly energy efficient compared to electric models.
  • Cost-effective fuel option compared to electricity.
  • Comes in various types, including tankless, tank-style, and hybrid models.


  • Requires frequent refilling of the propane tank.
  • It may require additional venting systems. 
  • May not be feasible in areas with limited propane availability or high costs.

4. Hybrid or Heat Pump Water Heaters

Hybrid or Heat Pump Water Heaters

Hybrid water heaters combine traditional tank storage with a heat pump to extract heat from the air and use it to warm the water. They use 60% less power than conventional water heaters, making them an excellent alternative.


  • Use less electricity.
  • Lower greenhouse gas emissions.


  • Higher upfront costs.
  • Less efficient in colder climates.
  • Heat pumps can be noisy.

5. Solar Water Heaters

Solar Water Heaters

Solar water heaters use solar panels typically installed on the roof to collect heat from the sun to warm the water.


  • Virtually free to operate once installed.
  • Lower greenhouse gas emissions.
  • Reduce dependency on grid electricity or natural gas.
  • Government incentives and tax credits can lower the cost


  • Initial setup can be expensive.
  • Efficiency drops during cloudy or rainy days.
  • Backup system needed for cloudy days, raising costs.

6. Electric Water Heaters

Electric Water Heaters

Electric water heaters use electric resistance coils to heat water. They are available in both tank and tankless versions.


  • Easier and cheaper to install than gas models.
  • Less expensive to purchase.
  • Precise temperature control.
  • Clean operation.
  • Safer (no carbon monoxide).


  • Higher operating costs.
  • Dependent on power supply
  • Limited capacity for simultaneous use.

7. Point-of-Use Water Heaters

Point-of-Use Water Heaters

Point-of-use water heaters are mini tanks or tankless units installed at the point of use, like a sink or shower, to provide localized heating. You can find tank and tankless versions of point-of-use water heaters.


  • Minimized heat loss since the unit is close to the point of use.
  • Small footprint.
  • Functions independently from the central water heating system.


  • It is not ideal for simultaneous multiple uses.
  • Costs can add up for multiple units.

8. Condensing Water Heater

Condensing Water Heater

Condensing water recycles waste gas from the combustion processes of other household appliances, such as your oven, and uses it to heat your water. Condensing water heaters are suitable for homes primarily using natural gas for heating and cooking.


  • Uses otherwise wasted heat, reducing energy bills.
  • Lower operational costs long-term. 


  • High upfront costs.
  • Units can be bulky, making them less suitable for smaller spaces.

9. Combination Boiler Water Heater

Combination Boiler Water Heater

Combination boiler water heaters, commonly known as “combi-boilers,” serve dual purposes. They act as both water heaters and central heating units. They have no storage tank, so you can consider them tankless water heaters.


  • One unit takes care of heating and hot water, reducing space. 
  • Reduced heat loss since there’s no need for a separate tank.


  • Not ideal for larger homes with high hot water and heating demands. 

Comparison of Water Heater Types Table

Water Heater TypeProsConsLifespan
Tank Water HeatersVarying sizes, affordable.High long-term energy costs.10-15 years
Tankless Water HeatersCompact, long-lasting, efficient.Expensive, complex installation, may not meet high demand.Over 20 years
Propane Water HeatersIdeal for rural areas, cost-effective.Frequent refilling, additional venting, limited availability.10-15 years
Hybrid/Heat Pump HeatersLow electricity use, reduced emissions.Higher upfront costs, less efficient in cold climates.10-15 years
Solar Water HeatersVirtually free, lower emissions, incentives.Expensive setup, efficiency on cloudy days, need backup.20-30 years
Electric Water HeatersEasy installation, lower costs.High operating costs, power-dependent, limited capacity.10-15 years
Point-of-Use Water HeatersMinimized heat loss, compact.Not for multiple simultaneous uses, cost accumulates.10-15 years
Condensing Water HeatersUtilizes wasted heat, lower costs.High upfront costs, bulky units.10-15 years
Combination Boiler HeatersAll-in-one, reduced heat loss.Not for large homes with high demand.15-20 years

Which Type of Water Heater Is Right for You?

Choosing the right water heater for your home isn’t just about replacing an old one with a similar model. Various factors come into play, ranging from your household’s needs to budget constraints and environmental considerations. Here’s how to navigate through the myriad of options:

  1. Assess Your Household’s Hot Water Needs: Consider the number of bathrooms, sinks, and any appliances that rely on hot water. If your house has a high demand for simultaneous hot water usage, like running the dishwasher while someone is showering, a tank or a larger tankless water heater may be suitable.
  2. Think About Your Budget: While tankless or hybrid models have higher upfront costs, they often pay off in energy savings over time. On the other hand, traditional tank models are usually cheaper initially but may have higher operating costs due to less efficient energy usage.
  3. Remember Space Constraints: Tank models require more space, making them less ideal for apartments or smaller homes. Tankless models are compact and can often be wall-mounted, offering a space-saving solution.
  4. Consider Energy Sources: Natural gas is often more cost-efficient but unavailable everywhere. Electric models are more versatile in terms of installation but may be more expensive to operate, depending on local electricity rates.
  5. Lifespan and Warranty: Look for models with a comprehensive warranty. Tankless water heaters usually have a longer lifespan—up to 20 years, compared to 10-15 years for tank models.
  6. Check Local Codes and Regulations: Ensure the model you’re considering complies with local and state regulations. You may also be eligible for federal or state rebates if you choose a more energy-efficient model.

If you don’t want to consult with a professional, consider just choosing the same type you already have. Keeping the same format will save you costs in retrofitting your current space to fit the new model.