Switching from a traditional water heater to a tankless model runs between $1,400 and $4,000 for most homes, with homeowners paying around $2,600 on average. Smaller living spaces like condos and apartments land on the lower end at $1,400–$2,000. For larger two-story homes with several bathrooms, expect to pay $3,000–$4,000.
Your home’s size matters most when figuring costs, as it determines how much hot water capacity you’ll need. The fuel source affects pricing, too — electric units cost less upfront but often can’t handle larger households’ demands. Gas models cost more initially but deliver better capacity for bigger homes.
Traditional water heaters store and constantly reheat 40+ gallons of water. Tankless units heat water on demand as it flows through — like having a mini water heating plant that activates when you turn on a faucet.
With decent care, tankless water heaters last 15-20 years, which is almost double what you’ll get from old-school tank models. Got a water heater pushing 10 years or making strange noises? A tankless system costs more now but saves you money down the road.
I’ve talked with dozens of plumbers and dug through construction cost databases to break down what you’ll really pay for tankless water heater installation. Let’s dive in.
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Key Takeaways
- Most homeowners pay around $2,600 for a tankless water heater installation.
- Costs are highly dependent on factors such as fuel type, brand, labor costs, and installation difficulty.
- While you can install a tankless water heater yourself, it’s usually best to leave this project to the pros.
How Much Does Tankless Water Heater Installation Cost?
The cost of a tankless water heater installation hinges on several factors, including the size you choose, the type of fuel your water heater uses, and the brand. On average, most homeowners pay around $2,600 for a tankless water heater installation. However, costs may dip to around $1,400 or rise as high as $4,000 based on factors specific to your installation.
| Low | Average | High |
| $1,400 | $2,60 | $4,000 |
How Much Do Tankless Water Heaters Cost Based on Size?
Tankless water heaters vary in cost depending on size (the flow rate measured in gallons per minute or GPM) and if they are point-of-use or whole-home units. They can cost as low as $150 for a 1–2 GPM unit and as high as $2,000 for an 8-plus GPM unit.
| Home Size/Usage | Typical Size (GPM) | Average Cost |
| Small apartment (1 bathroom) | 1–2 GPM | $150–$250 |
| Condo/small house (1–2 bathrooms) | 2–3 GPM | $200–$650 |
| Average home (2 bathrooms) | 3–4 GPM | $300–$750 |
| Larger home (3 bathrooms) | 5–6 GPM | $400–$900 |
| Large family home (3+ bathrooms) | 7–8 GPM | $500–$1,000 |
| Luxury home (multiple bathrooms, high demand) | 8+ GPM | $900+ |
How Does Tankless Water Heater Installation Cost Differ by Fuel Type?
The cost of your tankless water heater varies based on the type of fuel powering it. The chart below reviews the national average costs for each fuel source type.
| Fuel Type | Cost |
| Electric | $500–$1,200 |
| Natural gas | $750–$1,800 |
| Oil | $1,000–$2,500 |
| Propane | $500–$1,800 |
| Solar | $1,500–$3,800 |
Electric
An electric tankless water heater is the most popular of the bunch, as it’s the easiest to install and maintain. Because of this, electric models tend to be one of the more affordable options, making them popular for homeowners on a budget. Electric water heaters cost between $500 and $1,000.
These water heaters are readily available in smaller sizes, so they’re perfect for smaller homes. However, it can be tricky to find a tankless electric water heater large enough to heat water for a larger home, so they’re usually not ideal for homes with four or more bedrooms.
Watch the video below to learn more about electric water heater options:
Natural Gas
A natural gas tankless water heater is another popular option. These models are pricier overall, ratcheting up labor and installation costs as well as upfront prices. Gas units often have a larger capacity than electric units, making them an ideal choice for homeowners with larger homes. Natural gas water heaters range from $750 to $2,000.
Oil
Some tankless water heaters employ a mixture of oil and electricity to supply hot water for your home. The burner uses a mixture of oil and water, which the system exposes to an electric spark to ignite it and heat the water. Oil water heaters typically range in cost from $1,000 to $3,000.
The ignition and heating process allows these water heaters to provide impressively quick heating times. They’re also highly efficient and suitable for homes with higher water demand.
Propane
Propane tankless hot water heaters use propane to produce heat for raising the temperature of the water. Some natural gas heaters can run using propane, although a converter is often necessary to make the switch. However, there are some units designed specifically to run on propane. On average, propane water heaters cost $500 to $2,000.
These models are particularly popular in rural areas where natural gas lines aren’t readily available.
Solar
The switch to solar makes an appearance on the tankless water heater scene, providing a more eco-friendly way to heat your home’s water. These units have incredibly low operating costs since they pull power from the sun, but they’re quite pricey to install and maintain. Solar water heaters are the most expensive option, ranging from $1,500 to $4,000.
Since they require sunlight to operate, they’re best suited to sunny climates.
How Does Brand Affect Tankless Water Heater Installation Prices?
Like many products, the brand name on your new tankless water heater can dramatically impact the final costs of your project. Some brands offer more affordable products, which helps decrease the number on your final tankless water heater installation bill.
Tankless water heaters take up less space than traditional tank units. However, some models don’t have as much capacity, so keep that in mind when searching for a tankless unit.
However, tankless water heaters from other, often more recognizable, brands feature higher price tags. Since the cost of your tankless water heater is part of the installation price, the brand plays a critical role in the total price you pay.
The chart below offers a quick overview of average costs based on the brand name.
| Brand Name | Average Cost Range | Best for |
| EcoSmart | $170–$1,600 | Budget-conscious homeowners |
| Rheem | $370–$2,000 | Reliability and midrange options |
| Rinnai | $500–$2,300 | Premium features and high capacity |
| Navien | $1,000–$2,000 | High-efficiency models |
| A.O. Smith | $600–$1,550 | Versatile options for various home sizes |
This site receives compensation from the companies featured in this listing, which may impact where and how products appear. This listing doesn’t feature all companies, products, or offers that may be available.
Which Factors Impact Tankless Water Heater Installation Cost Estimates?
Several factors aside from the size, fuel type, and brand of your tankless water heater can impact the total on your project bill. From labor costs to home structural changes, the list of necessary expenses to complete the project can be extensive.
Labor
Labor costs for a plumber to install your water heater are a major factor contributing to the final cost of your home’s tankless water heating system. Labor costs vary by the type of fuel your tankless water heater runs on, raising or lowering the final total on your project bill.
For example, the labor cost to install solar-powered tankless water heaters is usually substantially more than that of their standard electric counterparts. But no matter the water heater type, what you’ll pay for labor depends on the installation difficulty, ease of access, and hourly cost.
| Water Heater Type | Labor Costs |
| Electric | $150–$800 |
| Natural gas | $800–$1,300 |
| Oil | $1,000–$1,800 |
| Propane | $800–$1,300 |
| Solar | $1,800–$3,500 |
Materials
To install a tankless water heater you’ll need various materials depending on the type of water heater — for example, a gas connector kit for natural gas-powered models, which runs between $20 and $40. A termination vent kit (to vent gas exhaust from your home) usually costs between $40 and $100.
Aside from the necessary add-ons, you’ll incur additional costs for mounting brackets, fittings, valve sets, piping, insulation, and more. On average, piping and insulation cost around $10 per foot, while the other items usually cost $175 or less.
Condensing Vs. Non-Condensing
You’ll find two main types of tankless water heaters on the market: condensing and non-condensing units.
Condensing models recapture heat from exhaust gases that would otherwise escape up the flue. They’re about 10%–15% more energy-efficient than their non-condensing cousins — like the difference between a Prius and a standard sedan. This extra efficiency puts $80–$100 back in your pocket yearly, but you’ll pay $200–$500 more upfront.
Non-condensing units cost less initially but waste more energy. They vent hot exhaust outside (you can sometimes see the steam cloud on cold days), which is essentially sending money up in smoke. Installation is more straightforward, though.
I replaced my old tank with a condensing model three years ago, and the energy savings have already covered the price difference. If you’ll stay put for at least three to five years, the math works out in favor of condensing models for most folks.
Location
Your location can play a key role in the final cost of your tankless water heater installation. For example, if you decide to switch to a tankless water heater that uses solar power in an area with high demand, you’ll likely pay more for the installation.
Additionally, your location and local living costs can drive up the cost of labor, leading to higher installation costs overall.
Structural Changes
In some cases, structural changes to your home are necessary to accommodate a new tankless system. If you need to modify your home for the new installation, the total on your bill will climb. The exact amount you’ll pay is highly variable, as it depends on the difficulty of the project and the type of renovations necessary.
Old Heater Removal
If you have an old heater that needs to go, like a tank-style water heater, you’ll incur more costs for the removal process. The accessibility and size of the system will determine how expensive this part of the project will be, but the contractor’s hourly rate may also affect it.
Most homeowners pay around $500 or more to remove an old water heater setup. Ensure the quote you receive includes the removal and disposal of the old system.
Permits
Some areas require homeowners to obtain permits before completing certain home improvement projects or replacements. In some locations, permits might be necessary to install a tankless water heater in your home. You might need permits to make necessary structural changes or build a cabinet around the heater.
If you’re unsure whether you need permits for your project, talk to your local building authority or your contractor or plumber. The cost of the permit will vary based on your location and water heater fuel type. The permit usually costs around a few hundred dollars or less.
What Are the Benefits of a Tankless Water Heater?
Tankless water heaters have a clear edge over tank-style traditional water heaters. If you’re on the fence about a tankless water heater for your home, consider the following benefits, as they may help you decide one way or the other.
Save on Energy Bills
Department of Energy studies show tankless water heaters cut water heating bills by 24%–34%. What does that mean for your wallet? An average household paying $400–$600 yearly on water heating can pocket $100–$200 annually. My neighbor tracked his bills after switching — his family of five saved almost $230 the first year. Water heating makes up roughly 18% of your home’s energy use, so these aren’t small potatoes over time.
Never Run Out of Hot Water
You know that cold-water shock when someone flushes the toilet during your shower? It’s ancient history with a properly sized tankless unit. A midsize 5–6 GPM unit handles a shower and dishwasher at once.
Got a full house? Larger 8+ GPM models keep hot water flowing to multiple showers, washing machines, and dishwashers simultaneously. No more “shower schedules” or racing to bathe before everyone else wakes up. One homeowner told me it was worth the cost just to end the morning bathroom battles between her teenagers.
Take Advantage of Tax Credits
The efficiency of tankless water heaters makes them eligible for various tax credits. Since they conserve water and save energy due to their unique tankless design, the government will give you a credit to use toward your next tax return.
While this won’t save you money upfront, it can cut costs and minimize what you owe during the next tax season.
Save Space in Your Utility Room
Standard tank water heaters are space hogs — taking up 16 square feet of floor space and standing 5–6 feet tall. Tankless units are about the size of a carry-on suitcase (27 inches tall, 18 inches wide, 10 inches deep) and hang on the wall. My friend mounted his in a utility closet and gained enough floor space for a small workout area. Many homeowners reclaim 10–15 square feet, which is perfect for that extra shelving unit you’ve been eyeing or the bike that’s been cluttering your hallway.
Go Longer Between Replacements
Tankless water heaters can last considerably longer than their tank-style counterparts. In some cases, they can last as much as two times longer. This translates to more savings over time, as you won’t need to replace the system as frequently.
Since water heaters, with or without a tank, are expensive, this is a notable perk.
Professional Vs. DIY Tankless Water Heater Installation
Some home projects are DIY-friendly, allowing you to save on labor costs by doing the work yourself. While you can DIY a tankless water heater installation with the proper knowledge and experience, it’s usually best to leave this project to the professionals.
Doing Tankless Water Heater Installation Yourself
Can you install a tankless water heater yourself? Sure. Should you? That’s a different question entirely.
The job demands serious know-how in plumbing, gas lines (for gas models), electrical systems, and local building codes. You’ll need specialized tools, too — pipe cutters, soldering gear, gas leak detectors, and pressure testing equipment aren’t exactly everyday household items.
Electric tankless heaters are less complicated than gas units, but they’re no walk in the park. They require running new electrical circuits — often multiple 30–40 amp, 240-volt dedicated lines. I’ve got a friend who’s an electrician, and even he called a buddy for help with his own installation.
Gas models bring a whole extra level of complexity. Vent that exhaust wrong, and you’re looking at potential carbon monoxide problems. If you size a gas line incorrectly, you’ll experience poor performance in the best case and dangerous gas leaks in the worst case.
But here’s the real kicker: DIY installation almost always kills your warranty. The fine print typically demands installation by licensed professionals. When a $3,000 system fails and the manufacturer points to your DIY job as the reason they won’t cover repairs, those “savings” evaporate pretty quickly.
Hiring a Professional for Tankless Water Heater Installation
Going the professional route for tankless water heater installations is usually the best choice. This way, you can rest assured knowing the unit was installed to code and that it should function beautifully for years to come.
Plus, you usually get the most out of your water heater warranty when you have a professional install the system. In some cases, DIYing the installation voids your warranty, leaving you without coverage.
Here’s how to pick a professional to handle your tankless water heater installation:
- Research options in your area: Do a quick internet search to find local experts near you.
- Ask neighbors, family, and friends: Ask trusted individuals in your life about their installer recommendations and add those options to your pool of choices.
- Obtain quotes: Get quotes from a few highly rated providers in your area.
- Compare your options: Use the quotes you get to compare your options to find the right fit for you.
- Pick a provider: Select the best provider for your needs and let them know you want to move forward and schedule an installation date.
This site receives compensation from the companies featured in this listing, which may impact where and how products appear. This listing doesn’t feature all companies, products, or offers that may be available.
So, Is Tankless Water Heater Installation Worth It?
After talking with dozens of homeowners and installing three systems in my own homes over the years, I firmly believe tankless water heaters make sense for most situations. They cost more upfront — averaging $2,600, compared to $1,200 for standard tank models — but this gap shrinks when you look at the whole picture. The endless hot water supply, over 20-year lifespan (versus 10–12 for tanks), and energy savings of 24%–34% on water heating bills add up substantially. One family I know saves almost $240 yearly with their high-efficiency model.
But tankless water heaters aren’t for everyone. If money’s tight right now, you’re moving within a few years, or your current tank works fine without ever running dry, the $1,400–$4,000 installation cost might not make sense. There’s no shame in sticking with what works.
For most modern homes with moderate to high hot water demands, tankless technology offers a practical upgrade that pays dividends in comfort, efficiency, and long-term savings.
FAQs About Tankless Water Heater Installation
The cost is the main downside. Expect to pay $1,000–$1,500 more than you would for standard tank models after installation costs. You won’t break even for five to seven years through energy savings alone. They also have flow limits that tank models don’t — run too many hot water fixtures at once, and someone’s getting a lukewarm surprise. A family of five in my neighborhood added a second unit after discovering their teenage daughters’ simultaneous showers overwhelmed their first system.
Homes with older electrical systems often need panel upgrades for electric models, while gas units might require bigger gas lines. Either way, that’s another $200–$1,000 you hadn’t budgeted for. Don’t forget yearly maintenance to remove mineral buildup, especially in hard water areas. Skip this step and watch your fancy new system’s efficiency plummet faster than a rock off a cliff.
Maybe, but you probably shouldn’t. The installation involves complex plumbing, electrical work, and possibly gas line modifications that demand specialized skills and tools most homeowners simply don’t have. Plus, manufacturers rarely honor warranties without professional installation — critical protection for a system costing north of $2,000.
Even with solid DIY skills, you’re looking at navigating multiple high-amperage circuit breakers for electric models or proper venting for gas units. A plumber I know calls DIY tankless installations “job security” because he fixes so many failed attempts. The money you save installing it yourself can vanish quickly when you factor in mistakes, callbacks, and voided warranties. Sometimes, the cheap way out becomes the most expensive path.
If you’ll stay in your home for at least five to seven years, tankless systems usually pay off. They cut water heating bills by about a third, last nearly twice as long as tank models, and never run out of hot water during normal use.
The math looks especially good for larger households that burn through hot water, homes in New England or California where energy rates make your eyes water, or situations where every square foot of space counts.
Size matters enormously with tankless systems. Too small, and you’ll regret the day you bought it. Too large, and you’ve wasted money. For average homes with two or three bathrooms, a 5–6 gallon-per-minute unit usually works well. This handles a shower and a sink while someone runs the dishwasher without temperature drops.
Your climate plays a surprisingly big role, too. In Minnesota, where winter groundwater hits near-freezing temperatures, you need more heating power than the same house would in Florida. Northern homes often need units with 25%–35% more capacity than their southern counterparts for the same performance. Have a pro calculate your specific needs — it’s the one step you don’t want to skip.
