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Where Should a Tankless Water Heater Be Installed in My House?

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One of the biggest perks about going tankless is the space you save. Without a massive, bulky tank to think about, where you put your water heater is made infinitely easier. However, there are a few considerations to keep in mind if you're installing a tankless water heater in your home.

Generally, a good place to install your new tankless unit is in the same space your old water heater was located. Gas lines and water hook-ups are already handy, so installation is made smoother, minimizing some of the extra electrical and plumbing work that can be necessary when swapping to a tankless system.

As a pretty solid rule of thumb, you should never install a water heater near any combustible materials. Seems obvious enough - a tankless water heater's heat exchanger has to rapidly turn cold water into boiling water after which it is mixed and shipped off at the right temperature to the tap.

The energy and temperature needed to do this is significant, so anything combustible should be far away. The same goes for small children and animals - keep your tankless unit in a space where its safely accessible for servicing and out of high-traffic areas.

Pipe wrench with fittings

Installation Area Considerations

Despite the spatial freedom afforded to you by your new compact water heating system, there are a few key considerations to have in mind when deciding where to install your tankless unit.

Proximity to Household Electrical Panel

Having your water heater installed in a spot close to your home's electrical panel is simply to minimize the need to put in extra wiring, a process that can involve opening your walls up and can get expensive fast.

This is especially important to consider if you're installing a fully-electric tankless water heater: New cabling will be installed and the electrical capabilities of your home may need to be inspected to ensure the unit can draw enough power from your home's electrical grid.

Both electric and gas tankless water heaters depend on electric components like flow sensors and internal computers to regulate outgoing temperature and light the heat exchanger: Having your unit close to main electrical hookups will make installation and future servicing much easier.

Temperature and Weather

Most full-house water heaters are intended to be installed indoors. This is in part is to protect the internal electrical components from being worn down at the hands of the elements. Without adequate protection, precipitation and debris will quickly lower the unit's ability to efficiently heat water, and cause premature wear and tear, which could result in the need to replace the unit sooner than necessary. 

Additionally, tankless water heaters are more sensitive to freezing temperatures than their traditional tank-based predecessors. Because water is not being constantly warmed, when a tankless water heater is not in use, if exposed to freezing temperatures, leftover water in the unit can freeze.

This will cause serious damage to your water heater and it's not often covered by manufacturer warranties. To avoid the risk of freezing your tankless water heater, install it in an area where the temperature will stay relatively warm. For those of us in the colder parts of the northern hemisphere, this consideration is more relevant. 

Some tankless models come with freeze protection capabilities. This means they pull a small amount of power to keep the body of the unit warm enough to avoid freezing any water that may be inside. This is more common for outdoor units.


For gas-fueled tankless water heaters, venting is key. It ensures exhaust fumes safely clear your home, fresh oxygen keeps the burners lit, and prevents your water heater from overheating. As such, the area you're going to install your new tankless water heater must accommodate for its venting needs.

Traditionally, most vents are installed at least 3-feet from a usable window if vented through the wall. This prevents any exhaust from coming back into the home.

Some homeowners may want to vent from their roof. This is possible in certain cases, but its best to consult the manufacturer and your water heater installer to ensure the distance is not too great.

Equally, choosing an area that's relatively free from constant dust and debris will allow your venting system to work efficiently for longer. If your air vent begins to inefficiently pull air in or out, your water heater's ability to deliver hot water is greatly reduced.

Proximity to Fuel and Mains

Installing your tankless water heater close to the gas line and water mains will minimize the extra supplies and work needed to switch to a tankless system. Much like some electrical models might require upgrading your electrical grid, your home's natural gas capabilities might also need to be upgraded to ensure you can draw enough fuel.

Being close to your home's water main is the same premise. For this reason, where your last water heater was installed is often the best place for your tankless unit to go as all of these hook-ups are already in place.

Proximity to High-Demand Areas

Consider placing your tankless water heater closest to the areas where hot water demand is the greatest. This will minimize the distance the hot water needs to travel, keeping it hotter because it arrives faster and thus making your water heating more efficient.

Installing your tankless unit near high-use showers or close to main appliances will mean you can keep the water heater's base temperature lower and thus save more energy.

Positioning Under Condensation Points

This is more of an issue with smaller point-of-use tankless units that are placed near appliances or in high-use areas, but it is worth noting regardless. Placing your water heater under pipes or vents that can condensate with liquid is not advised. 

This is because continual exposure to external water can corrode components like the heat exchanger body and lead to inefficiencies and malfunctions.

Municipal Regulations

Municipal regulations on tankless water heaters are important to note when switching to a tankless system. Different cities have different requirements about fuel availability, venting requirements, electrical capabilities and more.

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