Gas Tankless Water Heater Buyers Guide: What You Need to Know

Gas Tankless Water Heater

As on-demand water heating systems gain in popularity, gas tankless water heaters are frequently the top selling fuel source. There are many advantages that a gas tankless has over electric units, but they also have their share of short comings. Check out our complete article Gas vs Electric to see a full comparison.

As a general rule, you can expect to pay more for a gas tankless water heater and it should be noted that an annual professional inspection is recommended. Gas units tend to out perform electric tankless systems from an operating costs standpoint. However, this can be misleading since the lower price of gas fuel is the main reason. They actually have a lower EF rating (efficiency) than electric units.

How to Buy A Gas Tankless Water Heater​

How Does a Gas Tankless Water Heater Work

When a hot water tap is opened within the house, cold water flows into the tankless water heater and triggers the gas burner to jump into action. The cold water travels thru a heat exchanger which warms the water. When the water leaves the unit it is hot.

On-demand systems are not limited by the size of a storage tank like their traditional hot water heater cousins. They are capable of delivering a seemingly endless stream of hot water. They are, however, limited by their flow rate.

There is less room for error when you select the size of your tankless. A traditional water heater uses a storage tank to hold a reserve of hot water, but an on-demand system doesn't have this buffer. If the household demand exceeds it's ability to heat the water, it is forced to deliver lukewarm water.  Correctly sizing your unit will prevent this from happening. 

Selecting the Right Size

Tankless systems are sized by the amount of water the unit is capable of heating at any given time. This is called a flow rate. 

If you purchase a system that has too low of a flow rate to meet your household's hot water needs, the unit won't be capable of delivering enough hot water. Nobody likes a cold shower, so it's critical that you choose a unit that is large enough to deliver hot water during your family's peak usage.

The 2 things you need to know to size a tankless: 
  • Temperature Rise: The difference between the incoming ground water temperature and the heated output temperature.
  • Flow Rate - The amount of water a tankless water heater is capable of heating at any given time.

As a rule of thumb, a tankless water heater can deliver between 2 to 5 gallons (flow rate) of hot water per minute (GPM). Read our tankless water heater buyers guide to learn how to properly size an on-demand system.

Gas Fueled Tankless Water Heaters

Gas tankless units tend to be able to deliver a higher flow rate than electric systems. ​They offer a quick response time and high heat output, and they are an excellent choice if you have access to natural gas or propane in your area.

Things to consider when purchasing a gas tankless water heater:

Fuel Supply Line

The fuel supply line is the gas line that leads into your house and connects to the tankless unit. This line must be able to provide enough fuel for the large burners to deliver instantaneous hot water.

A traditional water heater will have an output in the range of 75,000 Btu/h, but a tankless unit is frequently more than double that amount commonly weighing in at up to 200,000 Btu/h.

If your home isn't prepared to deliver enough fuel, you'll need to increase the size of your gas fuel line.​


Gas tankless water heaters use an ignition system to ignite the burner that heats the water. There are 3 main types available, and as a general rule, the more complex the ignition system, the more expensive the tankless heater. 

Standing Pilot Light
  • A standing pilot light is always on ready to heat the water.
  • Generally used in lower-end units.
  • There are less energy savings with this type of pilot light because fuel is being burned whether the unit is heating water or not.
  • Less energy savings = Higher operating costs
​Direct Ignition
  • A direct ignition system delivers a spark to the main burner when it detects water flow.
  • These systems offer significantly improved energy efficiency over the standing pilot light units.
  • Depending on the design, the unit either requires an electrical outlet nearby or cell batteries to operate.
Hydro-Power Ignition
  • The burner is ignited when water flows into the unit and activates a small turbine.
  • Does not require an electrical connection or batteries to operate.
  • Manufactured by Bosch.


Non-condensing gas tankless water heaters need air to carry out combustion. Once combustion occurs the exhaust needs to be directed outside thru a vent. The venting system is more complex than what is used for traditional water heaters, but is also offers more flexibility, as the vents can run through the roof or horizontally thru a side wall.

The venting material from your traditional water heater will need to be replaced with a corrosive-resistant Category III vent made from stainless steel. As you might image, it is also more expensive.​

Due to the combustion efficiency, condensation frequently develops within the vents. The condensation is highly acidic and standard venting material would be quickly "eaten" away, which is why a heavy-duty vent is required. ​

  • Venting is not necessary for outdoor models or indoor condensing models.

Types of Gas Tankless Water Heater

There are 3 basic types of gas tankless water heaters:

  • Non-condensing.
  • Condensing
  • Outdoor​

Non-Condensing Tankless Water Heaters

Non-condensing tankless water heaters are designed to be installed indoors. They  are generally less expensive to purchase and more expensive to install since they require Category III venting. These type of systems have two different vent configurations.

Direct Vent​
  • Air is drawn from outside the house into the tankless water heater for combustion.
  • There are two vents: One for air intake, and the other for exhaust.
  • A direct vent system allows the tankless unit to be install in smaller areas.​
Power Vent​
  • The air inside the house is drawn into the unit for combustion.
  • The exhaust is vented outside.
  • Installation must be in an area that provides adequate air flow for combustion.​

Condensing Tankless Water Heaters

Condensing tankless water heaters offer a more sophisticated venting option. They are more expensive to purchase, but less expensive to install since they eliminate the need for venting altogether.

  • ​A condensing unit extracts the heat from the exhaust and eliminates the need for expensive venting.
  • These units achieve a higher EF (efficiency) rating. Generally in the mid-to-high 90's.
  • Although, condensing units are more expensive than non-condensing units, the fuel costs are lower to operate the unit, this will offset the increased upfront cost.
This video shows how a condensing tankless water heater works:

Outdoor Tankless Water Heaters

An outdoor tankless water heater is designed to endure the weather. They are installed on the exterior of the house and utilizes the free air flow outside to vent the exhaust. In other words, no additional venting is needed.

If you live in an area where an outdoor unit makes sense, this can be a great choice if your house is already built and you are transitioning to a tankless unit. They are typically easier and less expensive to install as venting isn't needed and less modifications to your home may be necessary. ​

Higher-end units are designed with self-warming components that help prevent the unit from freezing and allows them to operate in low temperatures. Although, it should be noted, that outdoor units may not be the best option if you live in a climate that experiences freezing temperatures on a regular basis. ​


Always check your owner's manual for specific maintenance requirements and recommendations. Some manufacturers recommend performing maintenance every 6 to 24 months. Higher-end units will frequently be designed to resist lime scale build-up, and some units will even alert you when maintenance is necessary.

But if you live in an area where the water supply is especially hard, you should flush your unit more frequently and explore other proactive preventative options. 

There are many maintenance tasks such as flushing the unit, that the homeowner can complete. The use of a sediment filter is also recommended. 

Even with performing regular maintenance, a gas tankless water heater should be inspected annually by a trained professional. He will be able to verify that combustion is occurring safely and the unit is performing as expected.