How do I choose between on-demand and tank water heaters for a small household?

Short answer

For a small household (1–3 people), choose a tank water heater if you want the lowest upfront cost, simple installation, and predictable hot water for one task at a time. Choose an on-demand (tankless) unit if you have limited space, want continuous hot water and higher efficiency, and you’re comfortable with a higher upfront cost and periodic maintenance.

What matters most

• Usage pattern: How many fixtures run at once and for how long.
• Fuel and power: Gas vs. electric availability, venting, and electrical capacity.
• Climate: Colder incoming water reduces tankless flow capacity.
• Budget and maintenance: Upfront cost, operating cost, and service/scale control.
• Space and installation complexity: Clearances, venting, drain, and gas line sizing.

Pros and cons at a glance

• Tank (40–50 gal): Lower upfront cost, simpler install, handles short bursts well; has standby heat loss and finite capacity.
• Tankless (gas condensing preferred): Higher efficiency, endless hot water, small footprint; higher upfront cost, requires proper gas/venting, and annual descaling in hard water areas.

Step-by-step: Decide which fits your small household

Step 1: Profile your hot water demand

List typical simultaneous uses. A small household often runs one shower and maybe a sink at the same time.

Typical flows:
- Shower head: 1.8–2.5 gpm
- Bathroom faucet: 0.5 gpm
- Kitchen faucet: 1.0–1.5 gpm
- Dishwasher: 1–2 gpm (intermittent)
Target hot water temp: 120°F (recommended)
Incoming water temp: 40–60°F (colder in northern climates)

Example: One 2.0 gpm shower + 0.5 gpm sink, incoming 50°F → 120°F (70°F rise). A gas tankless needs to deliver ~2.5 gpm at 70°F rise—often a 150k–180k BTU model. A standard 40–50 gal tank will handle this easily but has a limited reservoir for back-to-back long showers.

Step 2: Check fuel, venting, and power

• Gas tankless: Often 150k–199k BTU; may require upsizing from 1/2" to 3/4" gas line and Category III/IV venting with condensate drain (for condensing units).
• Electric tankless: Can require 80–120A at 240V (multiple double-pole breakers). These struggle in cold climates and may need an electrical service upgrade.
• Electric or gas tank: Usually matches existing service; replacement is simpler.

Typical specs to verify:
- Gas tankless input: 150,000–199,000 BTU/hr
- Gas supply: 3/4" line, 7–10" WC under load
- Vent: 2"–3" PVC or stainless (per model), condensate drain with neutralizer
- Electric tankless: 240V, 3 x 40A breakers (example), #8–#6 AWG conductors
- Tank water heater height clearance: 2–4" top, service access in front

Step 3: Budget and operating costs

• Tank (40–50 gal): Unit $500–$1,500; install $700–$2,000. UEF ~0.60–0.70 (gas), ~0.90+ (electric). Standby loss present.
• Gas tankless (condensing): Unit $1,000–$2,500; install $1,500–$3,500+ due to venting and gas line work. UEF ~0.90–0.96.
• Payback: In small households with modest usage, savings from tankless can take many years to offset the higher install cost—unless gas prices are high or space constraints matter.

Step 4: Space and location

• Tankless: Wall-mount, great for tight spaces; needs proper vent terminations and condensate drain.
• Tank: Needs floor space and a drain pan with a drain or leak sensor; seismic straps in quake zones.

Step 5: Water quality and maintenance

• Hard water (≥7 grains): Tankless units need annual descaling; consider a softener or a scale-reduction filter. Tanks benefit from annual flushing and periodic anode rod checks.

If you choose a tank water heater (good fit for most small households)

• Size: 40–50 gal for 1–3 people is typical.
• Set temp to 120°F for safety and efficiency; use a mixing valve if you need higher storage temps.
• Add an expansion tank if you have a closed system (check code/PRV on main).

Tools and materials (DIY-friendly replacement)

• Adjustable wrench, basin wrench
• Tubing cutter (copper), PEX cutter and crimp/expansion tool, or press tool
• Pipe thread sealant or PTFE tape (gas-rated for gas connections)
• Dielectric unions (if copper-to-steel)
• Drain pan and 3/4" T&P discharge pipe to approved drain
• Flexible water connectors (stainless braided) or hard-piped copper/PEX
• For gas models: gas leak detector solution; manometer check by a pro is recommended

Safety checks

• Install seismic straps (where required).
• Route T&P valve discharge to a safe drain with no threads on the end.
• For gas: verify draft/venting, check for leaks, maintain clearances, and keep a CO detector nearby.

If you choose a tankless water heater (best for space savings and continuous hot water)

• Prefer condensing gas models for higher efficiency.
• Ensure gas line size and venting meet manufacturer specs.
• Plan for annual descaling and a sediment filter if your water is hard.
• Consider a demand-controlled recirculation kit to reduce wait time at distant fixtures without wasting energy.

Tools and materials (advanced DIY/pro-level)

• Same plumbing tools as above, plus isolation valves with service ports for descaling
• Condensate drain and neutralizer kit (for condensing)
• PVC/CPVC or stainless vent kit per model
• Drill/driver, hole saws, masonry bits (if penetrating exterior)
• Manometer for gas pressure (typically a pro tool)

Safety checks

• Follow venting clearances to windows, doors, and grade per manual.
• Slope condensate lines correctly; protect from freezing.
• Confirm gas pressure under load; improper supply causes flame rollout and soot.

Tips for best results

• Install WaterSense/low-flow fixtures to reduce demand.
• Insulate hot water lines, especially long runs.
• Add leak detection and a shutoff valve kit for tanks in living spaces.
• Flush tank heaters annually; replace anode rods every 3–5 years as needed.
• For tankless, perform a vinegar or manufacturer-recommended descaling annually and clean inlet screens.

Common mistakes to avoid

• Undersizing tankless by ignoring winter inlet temperatures and simultaneous uses.
• Skipping venting rules or using the wrong vent material.
• Reusing undersized gas lines (1/2" lines are often inadequate for tankless).
• No drain pan or T&P pipe on tank installs.
• Ignoring permits and local code requirements.

When to call a professional

• You need gas line upsizing, new vent penetrations, or combustion air calculations.
• Your electrical panel can’t handle an electric tankless load or needs new circuits.
• You’re unsure about code requirements (seismic strapping, expansion tank, condensate neutralizer).
• You can’t verify gas pressure or safe vent operation with proper tools.

Bottom line for a small household

• If you want the most straightforward, cost-effective solution and typically run one fixture at a time: a 40–50 gal tank is a strong choice.
• If space is tight, you take long or back-to-back showers, and you’re willing to pay more upfront and maintain the unit: a gas condensing tankless is a great fit. Double-check gas, venting, and winter flow rates before you commit.