Choosing the Best Water Heater for Your Home

There are many different types of water heaters available, and figuring out which is the best for your home can be an overwhelming process. Reliance is here to make this easy. Read through the following section and use our Water Heater Selector to ensure you'll have hot water daily for your family.

Tank Water Heaters

The most common type of water heater is the tank water heater. They come in electric, electric hybrid heat pump, and natural gas/liquid propane models. A tank water heater is an insulated tank that will heat and store your water until it is needed. A tank water heater comes in flexible sizing which can fit compact spaces, if needed.

Tankless or On-Demand Heaters

Tankless, or on-demand, water heaters don’t store hot water, they heat water as it passes through a series of coils in the water heater. Since the water heater only heats water as you use it, a tankless water heater is usually more energy efficient than a tank water heater. These water heaters come in both gas and electric connections.



A tankless water heater is a good choice for anyone who doesn’t require hot water in more than two places at a time, due to them only providing up to 7.5 gallons of heated water per minute.

A huge benefit of a tankless water heater is their space saving design, and since they do not store hot water, you eliminate the risk of leaky tanks. Tankless water heaters are typically more expensive than tanks in installation and purchasing costs, but will save more money in operating costs.

Point-of-use water heaters (mini tankless) are great for adding hot water to outbuildings, shops, or garages. They are very small and range in sizes from 2.5 gallons to 6 gallons.

Uniform Energy Factor (UEF)

The Uniform Energy Factor (UEF) is the current federal standard for measuring and comparing the energy efficiency of residential water heaters, replacing the older Energy Factor (EF) rating in 2017. Expressed as a decimal, the higher the UEF, the more efficient the unit:

• Gas Tank: UEF typically ranges from 0.59 to 0.70.
• Electric Tank: UEF typically ranges from 0.90 to 0.95.
• Gas Tankless: UEF typically ranges from 0.87 to 0.96.
• Heat Pump: UEF ranges from 3.30 to over 4.00, reflecting the ability to move heat from the air rather than generate it directly.

When comparing models, make sure you are comparing UEF values within the same usage bin, since the daily hot water volume used in the calculation varies across the very small, low, medium, and high tiers.

ENERGY STAR® Certification

ENERGY STAR® is a voluntary certification program run by the U.S. Environmental Protection Agency that identifies water heaters independently verified to meet efficiency standards significantly above the federal minimum requirements.

For water heaters, earning the ENERGY STAR® label typically means a heat pump model operates at least 50% more efficiently than a standard electric tank water heater. It can also mean that a gas tankless model achieves a UEF of at least 0.87. ENERGY STAR® certification may also be required to qualify for state rebates and utility incentive programs.

Types of Water Heater Purchases and Installation Costs

Purchase and installation costs vary by water heater type, and knowing what to expect upfront makes the buying process easier. Costs are shaped by fuel type, installation complexity, and the technology involved:

• Electric Tank: The least expensive to purchase and install, with no special venting or gas line work required.
• Gas Tank: Requires professional installation for venting and gas line connections, which adds to the overall cost.
• Tankless: Purchase and installation costs are higher than for tank models, and installation may require gas line upgrades or changes to electrical service.
• Heat Pump: The highest purchase price of all water heater types, but the savings add up fast. Hybrid electric heat pumps are 4x more efficient than a standard electric water heater and can save an average of $600 per year on energy costs. Many models also qualify for local utility rebates, which can reduce out-of-pocket costs.

Annual Operating Cost Comparison by Fuel Type

Operating costs depend on the unit's efficiency and the local energy price. Natural gas and propane units generally cost less to run annually than standard electric models, with heat pump water heaters costing the least to operate despite running on electricity:

• Electric Tank: The most expensive to run annually due to direct resistive heating.
• Gas Tank: Lower annual operating costs than electric tank models, with natural gas and propane both offering cost advantages.
• Gas Tankless: Operates more efficiently than a gas tank by heating water only on demand, which can lower annual energy costs.
• Heat Pump: The least expensive to operate of all water heater types, moving heat from the surrounding air rather than generating it directly.

Rebates and Incentives

Buying a qualifying high-efficiency water heater may make you eligible for financial incentives that reduce your out-of-pocket cost. Many states, utilities, and local governments offer rebate programs, particularly for ENERGY STAR® certified heat pump models. Savings vary by location, so visit the Reliance Rebate Center or your utility provider's website to find what's available in your area.

Planning ahead for a water heater replacement can help you avoid an unexpected breakdown. A failing water heater tends to show warning signs before it goes out completely. Leaks, inconsistent temperatures, and rising energy bills are all signals that a replacement may be coming soon, and catching them early lets you replace the unit on your own timeline rather than in a panic.

There are many water heater accessories available to improve the safety and efficiency of your water heater.

Expansion Tanks

Expansion tanks hold an additional volume of water that the heater produces when heating cold water in the main tank. These accessories connect to your standard water heater tank through your plumbing.

Water Heater Timers

Water heater timers ensure energy efficiency and money savings by only running your water heater when it’s needed. Wiring a water heater timer into your water heaters electrical supply can ensure your water heater only draws electricity at specified times.

Water Leak Detectors and Alarms

Water leak detectors sit either on the floor or in the pan beside the water heater, sounding an audible alarm that alerts the household that there’s a problem. Some of these alarms are compatible with Wi-Fi and able to send alerts to a smartphone.

Water Heater Insulation Blankets

Blankets that are made to fit over the water heater and strengthens the insulating ability of the tank. Insulating blankets are best for heaters that reside in garages or other unheated spaces.

Drain Pans

Pans that sit under the water heater and collect water from leaks or overflows caused by excess pressure in the tank. The pan has an opening in the side for a drain hose to carry away any overflow water.

Water Heater Stands

Water heater stands raise gas tanks off the ground and reduce the risk of fire in the event that flammable liquid spills nearby. If you’re replacing an old water heater and adding a stand to your new one, this addition affects your measurements, plumbing and venting. Some codes require water heaters to be on stands in garage applications.