A heat pump water heater typically costs between $1,500 and $3,000 for the unit alone, with installation adding another $600 to $2,000, depending on your home’s setup. While these systems have a higher upfront price than traditional gas or electric water heaters, they can cut water heating costs by 50% or more, making them a smart long-term investment.
Heat pump water heaters work by pulling heat from the surrounding air to warm your water, using far less energy than conventional models. Over time, the savings on your utility bills can more than make up for the initial cost, and many homeowners qualify for federal or local rebates that further reduce the price.
This guide breaks down heat pump water heater costs, factors that influence pricing, and how to maximize your investment.
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Key Takeaways
- Most homeowners pay around $3,600 to install a heat pump water heater.
- The cost of a heat pump water heater is highly dependent on the size and efficiency of the system.
- While DIYing a heat pump water heater installation is doable, this project is usually best left to the professionals.
How Much Does a Heat Pump Water Heater Cost?
A heat pump water heater typically costs between $1,200 and $6,000, with the average cost around $3,600. The final price depends on factors like the unit’s size, energy efficiency rating, and installation complexity.
- Smaller, less efficient models (suitable for 1–2 people) can cost as little as $1,200–$2,500.
- Mid-range models (for a family of 3–4) typically fall between $2,500–$4,000.
- High-capacity, ultra-efficient systems can exceed $5,000–$6,000 before installation.
Professional installation adds another $600 to $2,000, depending on whether you need electrical upgrades, new plumbing connections, or ducting adjustments.
| Low | Average | High |
| $1,200 | $3,600 | $6,000+ |
How Do Heat Pump Water Heater Costs Differ By Size?
The size of a heat pump water heater significantly impacts its cost. Larger units not only cost more upfront but may also require additional installation work, such as upgraded plumbing or electrical connections. Here’s a general price breakdown by size:
| System Size | Average Cost |
| 40 gallons | $1,200 – $2,000 |
| 50 gallons | $1,500 – $2,800 |
| 65 gallons | $1,800 – $3,000 |
| 80 gallons | $2,500 – $6,000 |
40 Gallons
A 40-gallon heat pump water heater is best suited to small homes with one or two people. These units can only adequately supply enough water for a few showers before they need more time to heat water, so they’re not ideal for larger homes.
On average, these systems cost between $1,200 and $2,000.
50 Gallons
A 50-gallon heat pump water heater works well in smaller homes with two to three people. Like the 40-gallon tank, it may run out of hot water after around 20 minutes of continuous showering, so it’s best suited to smaller homes or households where residents don’t regularly take consecutive showers.
These systems usually cost between $1,500 and $2,800.
65 Gallons
A 65-gallon tank takes things a step up, featuring a larger capacity and the ability to provide more hot water for more toasty rinses. It can supply plenty of hot water for midsize homes, as it has enough capacity to deliver up to 30 minutes of hot water for showering.
A 65-gallon system usually costs between $1,800 and $3,000.
80 Gallons
The 80-gallon tank is the largest of the bunch and is usually best suited to midsize to large homes with higher hot water demands. These systems can deliver 40 minutes or more of hot water for showering, making them ideal for more than a few individuals.
These systems are pricier, as most homeowners pay $2,500 to $6,000 or more.
How Does Efficiency Affect Heat Pump Water Heater Pricing?
The efficiency of a heat pump water heater directly affects both upfront costs and long-term savings on energy bills. More efficient models typically cost more but consume far less electricity, making them a smarter long-term investment.
More-efficient heat pump water heaters are usually pricier, whereas their less efficient counterparts are generally less expensive but have higher operating costs. However, since the cost of the system is highly dependent on its size, smaller models with high efficiencies are still usually more affordable than larger models with lower efficiency ratings. Here are the average costs based on the efficiency of the heat pump water heater:
| Efficiency (UEF) | Cost Range |
| 2.75 | $1,200 – $2,000 |
| 3.0 | $2,000 – $3,700 |
| 3.25 | $2,500 – $4,800 |
| 3.5 | $3,000 – $6,000 |
Wondering how heat pumps work? This video explains the principles of heat pumps, which work the same whether they’re heating the air or water in your home.
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 Heat Pump Water Heater Cost Estimates?
The cost of your heat pump water heater and the subsequent installation hinges on an array of factors, from labor costs to permitting. Here are a few key factors that contribute to the cost of your project.
Labor
Hiring a professional to install a heat pump water heater typically costs $1,000–$3,000, depending on your location and the complexity of the job. Labor rates vary by region—expect to pay more in high-cost-of-living areas.
If you have plumbing and electrical experience, you could save money by handling the install yourself. However, improper installation can void warranties and lead to inefficiencies.
Removal
If you’re replacing an existing water heater, removal and disposal usually add $100–$300 to your total cost. Some contractors include this in their pricing, while others charge separately. If you’re installing a water heater for the first time, this won’t apply.
Permitting
Most local governments require a permit to install a heat pump water heater. Fees range from $50 to $400, depending on your location. If you hire a contractor, they may handle the permitting process for you. DIYers should check with their local building authority before starting.
Location
Where you live affects both material and labor costs. Additionally, the ease of installation plays a major role in pricing:
Difficult installs (e.g., upgrading electrical capacity or installing in a tight space) require more labor and cost more.
Easier installs (e.g., replacing an existing water heater in the same spot) are cheaper.
System Brand & Efficiency
Brand and efficiency level impact upfront costs and long-term savings:
- Budget Brands ($500–$2,000): A.O. Smith, Ecosmart, Rheem
- Mid-Range & High-Efficiency Brands ($1,700–$4,000): Goodman, Daikin, Bosch, Bradford White
Higher-efficiency models cost more initially but reduce energy bills by $200–$500 per year.
Benefits of a Heat Pump Water Heater
1. Lower Energy Costs
Heat pump water heaters are 2–3 times more efficient than traditional models. Homeowners can save $1,000+ per yearon energy costs, depending on usage and electricity rates.
2. Environmentally Friendly
Unlike gas water heaters, heat pump models don’t produce direct emissions and use far less energy than standard electric models. This significantly reduces your home’s carbon footprint.
3. Longer Lifespan
Heat pump water heaters last 15 years or more, compared to 8–12 years for conventional water heaters. Choosing a unit with a strong warranty (10+ years) ensures a longer return on investment.
4. Tax Credits & Rebates
ENERGY STAR-certified heat pump water heaters qualify for a 30% federal tax credit, up to $2,000. Many states and utility companies offer additional rebates, potentially saving you thousands on installation costs.
Professional vs. DIY Heat Pump Water Heater Installation
If you have extensive DIY experience, installing a heat pump water heater might be an absolute breeze for you. However, if DIY home projects aren’t up your alley, this project is best left to the professionals.
Doing a Heat Pump Water Heater Installation Yourself
If you have experience with plumbing, HVAC, and electrical work, DIY installation can save you over $1,000 in labor costs. However, the process involves:
- Heavy lifting & plumbing connections
- Electrical upgrades (if your home isn’t already wired for the unit)
- Permitting & code compliance
Hiring a Professional for Heat Pump Water Heater Installation
If the prospect of installing a heat pump water heater yourself sounds daunting, you’re not alone. Many homeowners choose to outsource this installation process to save themselves time and the headache of figuring out the project alone. Plus, when you hire a professional, you can rest assured knowing your system is installed correctly.
Here’s how to find a local professional to install your heat pump water heater:
- Use the internet: Do a quick internet search to find local providers near you. Read through reviews on the top options to select a few highly-rated providers.
- Ask friends: If any of your neighbors, friends, or family members have a heat pump water heater, ask them about their provider recommendations. Use the information you collect to research your options and select a few highly rated picks.
- Get estimates: Contact your top picks and request a personalized estimate for your installation project.
- Compare your options: Use the estimates each provider gives you to compare your options to determine which best fits your budget and unique needs.
- Choose a provider: Once you finish comparing your options, it’s time to choose a provider. Select the option that best fits your needs and contact that provider to schedule an installation appointment.
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 a Heat Pump Water Heater Worth It?
For most homeowners, yes—a heat pump water heater is a smart investment. These systems cut energy bills by 50% or more, last longer than traditional water heaters, and qualify for generous tax credits and rebates that help offset the upfront cost.
However, heat pump water heaters aren’t ideal for every home:
- They work best in areas where temperatures stay above 40°F year-round.
- Homes with low electricity costs may not see as much savings.
- They require more space and proper ventilation to function efficiently.
If you live in a warm climate and want lower energy bills with eco-friendly benefits, a heat pump water heater is one of the best long-term water heating solutions available.
Related: What is the Cheapest Way to Heat Water for Your Home?
FAQs About Heat Pump Water Heaters
The primary disadvantage of a heat pump water heater is its steep upfront cost. Compared to non-hybrid appliances, these units are pricey, which can be a barrier for some homeowners.
Heat pump water heaters can be an incredibly cost-effective solution for many homeowners. While they cost more upfront, the return on your investment is worthwhile, as these systems are substantially more efficient than gas or electric water heaters.
Heat pump water heaters usually last between 10 and 15 years, although their lifespan hinges entirely on usage, quality, and maintenance.
