Water Heater Guide 2021

Need a new water heater? Many homeowners are surprised at the number of options out there and the decisions they need to make. Don’t be caught off-guard. Here’s everything you need to know about buying a water heater in 2021, from the types of systems available to which features are right for your home.

If you’re at the point where you’re ready to take the next step, talk to a licensed plumber in your area and have an expert out to your home to provide you with a written estimate. While this article can provide you with generalized guidance, there’s no substitute for getting an individualized recommendation and cost estimate from an experienced professional.

Find the right system for your home

Shopping for a new water heater? In our latest infographic, we cover all the essential differences between standard and tankless systems, including their efficiency, longevity, and cost.


Buying a new water heater

For water heaters, there are three main things you need to consider: type, size, and cost.


There are two main types of water heaters: standard and tankless systems. We’ll review more about these two varieties in one of the sections below. When shopping for water heaters, you’ll have to make a decision about what type of system you want and then, further, what type of energy it’ll use.


Water heaters come in a wide range of sizes. For standard “tank” systems, this often indicates the total capacity of the tank and how much hot water it can store. For tankless systems, “size” refers to how fast the system can heat water to keep up with demand inside the home—as we’ll review below, tankless systems heat water as it’s needed, so storage capacity isn’t an issue.

Typically, most homeowners replace their current water heater with a new one of approximately the same size. However, there are some exceptions to this rule. If you’re growing your family—you’ve had children, or your parents have moved in so that you can support them—you may want to also “grow” your water heater. That 20-gallon system isn’t going to be able to keep up with what your home now needs.

When in doubt, talk to an experienced plumber about your home’s hot water needs and what size of system is right for your household. Keep in mind that bigger isn’t always better: the larger the system, the more energy (and money) it’ll take to keep that hot water heated in the tank.


Standard water heaters are less expensive than tankless models, while electric systems are less costly to install than gas or propane models. As such, a standard electric water heater will cost far less to install than a gas tankless system.

According to data collected by HomeAdvisor, new water heater installation costs U.S. homeowners around $1,100 on average. This includes both the cost of the system and the labor involved with installation. However, your final cost really depends on a number of factors, including:

-The type of system
-The make and model
-The energy type
-The installation project (does ventilation need to be installed first?)

The best way to find out just how much your new water heater will cost is by getting a quote from a licensed, professional plumber in your area. As a final note on this subject: don’t think about cost one-dimensionally! Take into account how much the system will either save or cost you over the course of its lifespan. A less efficient system might seem like a great deal at the time, but could ultimately come out costing more in the long run.

Water Heater Type

For decades, the vast majority of U.S. homes featured standard water heaters. You’ve no doubt seen them: they feature that familiar tank, used to store hot water. However, in the last two decades, tankless systems have become far more popular, especially as their installation costs have dropped. Here’s what you need to know about both varieties of water heaters.

Standard Water Heaters

You’re no doubt familiar with standard water heaters. You probably have one in your garage, utility closet, or basement. These systems are incredibly common in U.S. homes. They feature a tank—for storing heated water—that connects to both your home’s tap and the hot water supply lines that run out to your kitchen sink, your shower, your bathrooms, and more.

Why are standard water heaters so popular? Beyond just our familiarity with them, they’re relatively inexpensive and reliable—a combination that any homeowner should be interested in. While they aren’t as energy-efficient or long-lasting as tankless systems, standard water heaters can provide your home with sufficient hot water for many years to come.

Tankless Water Heaters

Also known as demand-type water heaters, tankless systems are an energy-efficient, reliable alternative to standard water heaters. As you might have guessed from the name, tankless water heaters do not store heated water in a tank. Instead, they heat water as-needed before distributing it out through your home.

Tankless systems have several key advantages over standard water heaters. The key benefit is their versatility. Unlike tanked water heaters, demand-type systems can’t “run out” of hot water on busy mornings. Because they heat water as it’s needed, their capacity is only limited by how fast they can heat water. This makes them perfect for large households where hot water is in high demand at certain points in the day.

They’re also far more efficient: on average, tankless water heaters use about 30-40% less energy than standard systems. Most of this energy savings comes from not having to continually heat the stored water inside of a tank. Demand-type systems also tend to last longer, with most models having twice the lifespan of a tank water heater.

Tankless water heaters are often more expensive to install than standard units. However, over the long haul, this higher upfront cost can be offset by both your annual energy savings and the system’s extended lifespan. If you’re planning to stay in your home for several years, you might want to give demand-type systems a look.

Energy Source

The vast majority of water heaters are powered by either electricity, natural gas, or propane. Other, less common models include those that draw their power from solar or geothermal energy. For obvious reasons, you’ll need to have a pre-existing solar or geothermal energy setup to install those types of water heaters.

Electric Water Heaters

Many homes feature electric water heaters. These units heat water by running electricity through heating elements, warming them and the water in the tank. At a fundamental level, these heating elements are a lot like those in your toaster. They turn electrical current into heat energy.

Since there’s no combustion involved in heating water, electric water heaters do not require exterior ventilation. This means your water heater can potentially be placed anywhere in your home. Of course, it goes without saying that homes without a natural gas or propane connection will probably want to install an electric water heater.

If you’re in the market for a new water heater, be careful comparing electric, gas, and propane systems against one another. Electric water heaters often are more energy-efficient than either natural gas or propane units. Many homeowners make the mistake of thinking this means that they’ll be less expensive to run. The truth is that, in most communities, natural gas and / or propane is less expensive than electricity. While the electric water heater may be more efficient, it could end up costing you more to operate.

Natural Gas Water Heaters

If your home already features a natural gas connection, you may want to consider installing a natural gas water heater. Just like your furnace or range, these systems combust (burn) natural gas to generate heat energy. As covered in the section above, these water heaters are often less expensive to run than electric water heaters, which helps to offset their slightly higher upfront cost.

Depending on which model you install, your natural gas water heater may be able to continue providing your home with hot water in the event of a power outage. Older gas models often featured a pilot light. Many of today’s gas water heaters instead have an electricity-based spark system that safely ignites the gas.

If you’re installing a natural gas water heater in your home, talk to your contractor about what ventilation will need to be installed. These systems require adequate ventilation to carry away the fumes created by the gas combustion process.

Propane Water Heaters

While far less common than either electric or gas water heaters, propane models do exist. Depending on where you live, propane costs about the same as natural gas. Just like gas, these systems require ventilation and a pre-existing propane line.

Most people opt for propane over natural gas due to concerns about the environmental impact of natural gas combustion. Propane is considered a cleaner fuel to burn. Installing a propane system instead of a gas one can significantly reduce your home’s carbon footprint.

Which water heater is right for your home?

If you’re in the market for a new water heater, you’ll need to decide between installing a standard system or a tankless model. In our latest infographic, we break down the key differences between the two types, helping you figure out which might be best for your home.