Choosing a tankless water heater sounds simple until the questions start stacking up. Gas or electric? Non-condensing or condensing? Indoor or outdoor? And once those are settled, there’s still the brand shelf to sort through. Every one of these decisions affects flow rate, venting cost, installation complexity, and long-term operating costs. Make the wrong call on fuel type for a cold-climate home and the unit will struggle all winter. Go indoor when outdoor was a better fit and the vent run adds hours to the job. Pick a brand without checking what’s available for service and parts in the area and callbacks get expensive. This guide puts all three decisions side by side, with the specs and trade-depth reasoning to back each one up.
Gas vs. Electric: Where Each Fuel Type Actually Works
The fuel type decision drives almost everything else. Get it right and the rest of the job falls into place. Get it wrong and no amount of good installation work makes up for a unit that can’t meet demand.
Gas-fired tankless heaters, whether natural gas or propane, produce higher flow rates than electric models. The U.S. Department of Energy confirms this directly: gas-fired units deliver higher GPM, which matters most in multi-bathroom homes and cold climates where incoming groundwater temperatures are low. A condensing gas unit running on natural gas can deliver up to 11 GPM at a 35°F temperature rise. Whole-house electric units typically top out between 3 and 8 GPM depending on kilowatt rating and incoming water temperature.
The efficiency story is more nuanced. Electric tankless units convert virtually all electrical energy into heat, achieving site efficiencies of 98 to 99%. But that figure doesn’t account for how electricity is generated upstream or what it costs locally versus natural gas. In most U.S. markets, the lower operating cost of natural gas offsets the slightly lower combustion efficiency of gas units. The DOE puts the difference plainly: gas-fired tankless heaters can be 24 to 34% more energy efficient than conventional storage tanks for homes using 41 gallons or less per day.
Cold climates punish electric units more than gas. Incoming groundwater in northern states can drop below 40°F in winter. A whole-house electric unit rated at 5 GPM in a warm climate may deliver only 3 GPM when groundwater is cold enough to require an 80°F temperature rise. A 36 kW unit draws 150 amps, consuming more than half a 200-amp panel. In many older homes, that math forces a panel upgrade before the unit even goes in. Gas condensing units handle the cold-climate load without those electrical infrastructure requirements.
Electric units do have a legitimate use case: point-of-use applications. A small electric unit installed under a remote sink or at a dishwasher station eliminates long hot water wait times without running a gas line to that location. Pair one with a whole-house gas unit and the system covers both peak demand and remote-fixture convenience.
Key crossover from fuel type to sizing: always size gas units based on the coldest incoming groundwater temperature the system will see. A unit that delivers 10 GPM in summer may only deliver 6 GPM in January if groundwater drops to 40°F. The existing SupplyHouse sizing guide covers this in detail.
Gas vs. Electric Tankless: Spec Comparison
| Spec | Gas (Non-Condensing) | Gas (Condensing) | Electric (Whole-House) |
| Typical BTU input | 120,000–160,000 | 160,000–199,000 | N/A (kW rated) |
| Typical kW draw | N/A | N/A | 18–36 kW |
| Flow rate (35°F rise) | 5–7 GPM | 7–11 GPM | 3–8 GPM |
| UEF rating range | 0.82–0.87 | 0.90–0.96 | 0.97–0.99 |
| Venting required | Yes (B-vent or cat. III/IV) | Yes (PVC, CPVC, or stainless) | No |
| Gas line required | Yes (3/4″–1″ typical) | Yes (3/4″–1″ typical) | No |
| Electrical service | 120V for controls | 120V for controls | 150–200A dedicated circuit |
| Cold-climate performance | Good | Excellent | Limited — GPM drops |
| Condensate drain needed | No | Yes | No |
| Best application | Moderate-climate retrofit | Cold-climate whole-house | Point-of-use or mild climates |
Condensing vs. Non-Condensing: The Efficiency Split That Changes the Install
Within gas tankless, there’s a second decision that affects both operating costs and installation scope: condensing versus non-condensing.
Non-condensing units exhaust hot flue gases at temperatures high enough to require metal venting, typically Category III or IV stainless steel. They’re less expensive upfront and simpler to install in homes that already have a metal vent chase. Efficiency sits in the 0.82 to 0.87 UEF range.
Condensing units add a secondary heat exchanger that captures heat from the exhaust gases before they leave the unit. Exhaust temperatures drop low enough to allow PVC or CPVC venting, which is cheaper and easier to work with than stainless. Condensate drains acidic water as part of the process, so a condensate drain line is required. UEF ratings reach 0.95 to 0.96 on top models.
The condensing vs. non-condensing choice often comes down to what’s already in the building. If there’s an existing metal vent chase that’s appropriately sized, a non-condensing unit may be the cleaner retrofit. If it’s a new installation or a full system redesign, the lower venting material cost and higher efficiency of a condensing unit typically win on total installed cost over the life of the equipment.
Indoor vs. Outdoor: One Decision That Hinges on Climate and Space
Indoor and outdoor tankless units perform the same heating function. The difference is where combustion air comes from and how heat loss gets managed in cold weather.
Indoor units pull combustion air from outside via a dedicated intake pipe and exhaust through a vent pipe, or they draw from the mechanical room itself using an atmospheric setup. They require both an exhaust vent and, on direct-vent models, a combustion air intake. In climates that drop well below freezing, indoor units have the advantage: the unit itself stays protected inside a conditioned or semi-conditioned space, and freeze protection features handle the water lines. Rinnai’s condensing indoor units, for example, carry freeze protection ratings down to -22°F for the unit itself.
Outdoor units skip the vent run entirely, since they draw combustion air directly from ambient outdoor air. That eliminates one of the most labor-intensive parts of a tankless installation in many buildings. In mild to moderate climates, outdoor units are a cost-effective and space-efficient option. In climates with sustained temperatures below 0°F, outdoor units need freeze protection features, pipe insulation, and in some cases supplemental heat tape on exposed water lines.
One code point that matters on outdoor installs: setback requirements from windows, doors, gas meters, and electrical panels. Most manufacturers specify minimum clearances in their installation manuals, and local codes take precedence. Running those clearance calculations before rough-in saves callbacks.
Indoor vs. Outdoor: Decision Matrix
| Factor | Indoor | Outdoor |
| Venting | Required (PVC, stainless, etc.) | None — uses ambient air |
| Freeze protection | Built-in (down to -22°F on condensing) | Unit must have freeze protection rating; may need heat tape in harsh climates |
| Installation cost | Higher (vent run materials) | Lower (no vent run) |
| Space needed | Wall space + clearances indoors | Exterior wall space + clearances |
| Best for | Climates with hard freezes; existing vent chases | Mild to moderate climates; tight mechanical rooms |
| Code considerations | Combustion air requirements apply | Must meet setback requirements from windows, doors, gas meters |
Brand vs. Brand: Comparing Four Tankless Lines
SupplyHouse carries tankless water heaters from many manufacturers. This section compares four of them, Rinnai, Rheem, A.O. Smith, and Bradford White, as a sample of how product lines differ on output, efficiency, recirculation, and warranty. Each has model-specific strengths worth knowing before spec’ing.
Rinnai. Rinnai manufactures its own key components, which matters for parts consistency across the product line. The SENSEI RU series delivers 199,000 BTU input and a UEF of 0.95, with flow rates reaching 11 GPM at a 35°F temperature rise. The RUR and RXP series add built-in recirculation pumps with Circ-Logic technology, which pairs with an external pump to reduce hot water wait time at fixtures. Residential heat exchanger warranty on SENSEI models runs 15 years. Rinnai’s RL series covers non-condensing applications where a stainless vent chase already exists.
Rheem. Rheem’s IKONIC RTGH-SR series tops the condensing gas line with an 11 GPM output and a 0.96 UEF, the highest in Rheem’s residential gas catalog. EcoNet Wi-Fi comes built in rather than as an add-on module. The RTGH series covers the mid-tier condensing range at 8.4 to 9.5 GPM, and Rheem is one of the few brands on the shelf that also carries an electric tankless line through the RTEX series, giving contractors a single source for both fuel types.
A.O. Smith. A.O. Smith’s ATHR Adapt Premium series leads with a feature most competitors don’t include at this level: X3 integrated scale prevention technology, which addresses mineral buildup in the heat exchanger without a separate filter installation. The ATI series adds a built-in recirculation pump for applications where hot water delivery speed matters. A.O. Smith’s condensing line runs to 199,000 BTU, and the brand covers both indoor and outdoor configurations across the lineup.
Bradford White. Bradford White’s INFINITI lineup takes a different approach to combustion control with self-calibrating sensors that automatically configure the air-fuel ratio for flue length, gas type, and altitude without a combustion analyzer. The GR and GS series come in at 9.7 GPM with a built-in recirculation pump and a 22:1 burner turndown ratio, which reduces short-cycling at low demand. The dual stainless 316L heat exchanger on GR/GS models carries a 15-year warranty. Bradford White does not offer an electric tankless line.
Brand Comparison: Key Specs at a Glance
| Feature | Rinnai | Rheem | A.O. Smith | Bradford White |
| Top gas model output | 199,000 BTU / 11 GPM | 199,000 BTU / 11 GPM | 199,000 BTU / ~10 GPM | 199,000 BTU / 9.7 GPM |
| Condensing line UEF | Up to 0.95 | Up to 0.96 | Up to 0.95 | Up to 0.95 |
| Built-in recirc pump | RUR/RXP series | IKONIC series | ATI series | GR/GS series |
| Heat exchanger (top line) | Stainless | Stainless | Copper + stainless | Copper + stainless 316L |
| Residential HX warranty | 15 yr (SENSEI) | 12 yr (select) | 15 yr | 15 yr (GR/GS) |
| Indoor/outdoor options | Yes | Yes | Yes | K Series only (both) |
| Electric models | No | Yes (RTEX) | Yes (ProLine) | No |
| Wi-Fi / smart controls | Yes (Wi-Fi module) | Yes (EcoNet built-in) | Yes | Yes |
How to Match the Right Unit to the Job
Run through these four checks before spec’ing any unit:
- Confirm the fuel source and infrastructure. Natural gas line diameter matters. High-BTU condensing units typically need a 3/4″ to 1″ supply line. Undersized gas lines cause modulation problems and prevent units from reaching rated output. Verify static and dynamic gas pressure before installation. For propane, confirm tank capacity matches the unit’s peak BTU draw.
- Calculate peak simultaneous demand. Add up the GPM of every fixture that could run at the same time. Showers typically run 2 to 2.5 GPM each. A typical two-shower simultaneous draw needs at least 5 GPM at the required temperature rise. Always size to the coldest incoming water temperature the system will experience, not the average.
- Assess the venting situation. Existing stainless vent chase favors a non-condensing retrofit. New construction or full redesign favors a condensing unit with PVC venting. Outdoor installation eliminates the vent run entirely if climate allows. Check maximum allowable vent run lengths in the manufacturer’s installation manual before assuming a location works.
- Match climate to unit location. Cold-climate installs in climates with sustained sub-zero temperatures favor indoor condensing units with rated freeze protection. Mild to moderate climates can use outdoor units effectively. In any climate, the unit’s rated freeze protection temperature should exceed the coldest recorded temperature at that location.
Accessories Worth Specifying From Day One
A tankless unit without the right accessories is a callback waiting to happen. These aren’t optional extras on a well-spec’d job:
- Service valve kit (isolation valves with flush ports). Without isolation valves and flush ports, annual descaling and heat exchanger maintenance require shutting off the main water supply. Every condensing unit and most non-condensing units should have a service valve set installed at rough-in. SupplyHouse carries tankless water heater valves and accessories sized for 3/4″ connections.
- Condensate neutralizer. Condensing units produce acidic condensate. Many jurisdictions require neutralization before the condensate discharges to drain. Verify local code requirements and specify a neutralizer kit at installation.
- External recirculation pump. On units without a built-in pump, a dedicated recirculation line with an external pump dramatically reduces hot water wait time at remote fixtures. Without recirculation, large homes can see 30 to 60 seconds of cold water before hot water arrives at distant fixtures.
- Expansion tank. In closed systems created by a pressure-reducing valve upstream, thermal expansion from a tankless heater has nowhere to go without a properly sized potable water expansion tank. Weeping T&P valves and pressure problems are the result when this is skipped.
Frequently Asked Questions
How many GPM do most whole-house installations need?
Most single-family homes running two showers simultaneously need at least 5 GPM at the required temperature rise. The DOE recommends calculating the combined peak demand of every fixture that could run at the same time, using the coldest incoming water temperature the unit will face.
Can electric tankless units handle whole-house demand?
In mild climates, a high-kW electric unit can cover a small to medium home. In northern states where incoming water drops below 45°F in winter, whole-house electric demand pushes GPM output below comfortable levels and may exceed panel capacity. Electric units work best for point-of-use applications or as supplemental units for remote fixtures.
Can an outdoor tankless unit freeze in winter?
The unit itself has built-in freeze protection on most modern models, but the water lines running to and from an outdoor unit are exposed and can freeze. In climates that regularly drop below 20°F, outdoor units need insulated pipe runs, properly functioning freeze protection circuits, and in sustained hard-freeze climates, supplemental heat tape on exposed lines.
What gas line size does a high-BTU condensing unit require?
Most 199,000 BTU units require a 3/4″ natural gas supply line at minimum. Longer runs from the meter, or runs shared with other gas appliances, may require a 1″ line to maintain adequate dynamic pressure. Always verify static and flowing gas pressure at the unit location before installation. Manufacturer installation manuals specify minimum inlet pressure requirements.
How often should a tankless heat exchanger be flushed?
In areas with water hardness above 11 grains per gallon (roughly 180 mg/L), annual flushing is recommended. In soft water areas, every two to three years is common. Units with X3 or similar integrated scale prevention technology may extend service intervals. Without proper maintenance, scale buildup reduces heat transfer efficiency and can eventually crack the heat exchanger.
Does a condensing tankless unit require a condensate drain?
Yes. Condensing units produce acidic condensate as part of the heat recovery process. A drain line must be run to an approved drain point. Many jurisdictions require a condensate neutralizer before the drain point. Verify local plumbing code requirements.
What is the cold water sandwich effect?
The cold water sandwich happens when hot water is drawn briefly, the unit shuts off, the water in the heat exchanger cools, and the next draw sends a brief slug of cooler water before the heat exchanger catches back up. Units with a built-in recirculation pump and buffer tank design largely eliminate this. On units without built-in recirculation, a properly designed external recirculation loop addresses it.
Is a tankless unit a good fit for high-altitude installs?
Most modern condensing units derate automatically at altitude and many are rated for operation above 10,000 feet. Bradford White’s INFINITI K Series uses self-calibrating sensors that configure the air-fuel ratio for altitude without a combustion analyzer. Confirm altitude ratings in the installation manual for the specific unit being spec’d.
Can multiple tankless units be cascaded?
Yes. Most commercial-grade and some residential-grade condensing units support cascading for high-demand applications. Rinnai’s condensing lineup supports up to 24 units in cascade with a multi-unit controller. Rheem and A.O. Smith also offer cascade configurations for light commercial use. Cascading allows staged firing to match demand, reducing cycling and extending unit life.
What’s the expected lifespan of a tankless water heater?
The DOE puts typical tankless lifespan at more than 20 years with easily replaceable parts that can extend it further. In contrast, storage tank water heaters typically last 10 to 15 years. The 20-year figure assumes regular maintenance including heat exchanger flushing, inlet filter cleaning, and proper system setup at installation.
Before the Truck Rolls
Every tankless water heater decision traces back to three questions: what fuel is available and at what capacity, what does peak simultaneous demand look like, and what will the climate ask of the unit across its lifespan. Get those three answers right and the brand choice and installation location follow logically.
Start with confirmed gas line diameter and incoming water temperature data. Size to the coldest day, not the average. Match the venting approach to what’s already in the building when possible, and specify the accessories that prevent the callbacks: isolation valves, a condensate neutralizer on condensing units, and an expansion tank on any closed system.
SupplyHouse carries tankless water heaters from a wide range of manufacturers, with gas and electric options and the accessories needed to finish the job right. Shop all tankless water heaters.
