How to install tankless water heater? Mount the unit, connect the water lines, hook up the gas or electrical supply, and set up the venting system. Done correctly, the whole job takes a skilled DIYer 4 to 8 hours. The result is endless hot water and lower energy bills for 20 years or more.
That said, there are real differences between gas and electric models. Each has specific code requirements, sizing rules, and safety steps you must follow. This guide walks you through everything tools, costs, step-by-step installation, and the mistakes that can void your warranty or fail an inspection.
What Is a Tankless Water Heater?
A tankless water heater, also called an on-demand water heater, heats water only when you turn on a faucet. Unlike a traditional tank, it does not store hot water. Cold water flows through a heat exchanger inside the unit. A gas burner or electric heating element brings it up to your set temperature in seconds.
The result? You never run out of hot water. And you stop paying to reheat 40 to 80 gallons all day long, even when no one is home.
Here is a quick comparison:
Feature | Tankless Heater | Tank Heater |
Hot water supply | Unlimited (up to GPM limit) | Limited by tank size |
Energy use | Heats only when needed | Heats constantly (standby loss) |
Lifespan | 15 to 20+ years | 10 to 12 years |
Size | Wall-mounted, compact | Large floor unit |
Upfront cost | Higher | Lower |
According to the U.S. Department of Energy, tankless units are 24% to 34% more energy efficient than storage tank heaters for homes that use around 41 gallons of hot water per day.A tankless water heater, also called an on-demand water heater, heats water only when you need it. There is no storage tank sitting around full of hot water. When you open a faucet, a flow sensor activates the heating unit. Cold water passes through a heat exchanger (gas models) or over heating elements (electric models) and reaches your desired temperature in seconds.
Key benefits over traditional storage tank heaters:
Energy savings: According to Energy.gov, small on-demand heaters are 24% to 34% more efficient than storage tank models. Homes that use a lot of hot water see savings of 8% to 14%.
Longer lifespan: Tankless units typically last over 20 years. Traditional tanks last 8 to 12 years.
Space saving: Wall-mounted units free up significant floor space.
No standby heat loss: You only pay to heat water you actually use.
Outdoor installation option: Certain models can be installed outdoors, simplifying venting for gas units.
What Should You Consider For The Installation Process?
Gas vs. Electric Tankless Water Heater
This is the first decision you need to make. Both work well, but they have very different requirements.
Factor | Gas Tankless | Electric Tankless |
Fuel source | Natural gas or propane | Electricity (240V) |
Flow rate (GPM) | Higher — better for large homes | Lower — better for smaller homes |
Installation cost | Higher | Lower |
Operating efficiency | High — especially condensing models | High, but limited by amperage |
Upfront requirements | Gas line upgrade, venting | Panel upgrade, dedicated circuits |
Emissions | NOx — check local standards | None |
Propane vs. Natural Gas: Propane has a higher heat output per BTU, but natural gas is usually cheaper. Some units are configured for one fuel only confirmation before you buy.
Condensing vs. Non-Condensing Technology
This matters for both cost and venting.
- Non-condensing units have a single copper heat exchanger. Exhaust temperatures can exceed 300°F, so they require Category III stainless steel vent pipe.
- Condensing units have a second stainless steel heat exchanger that extracts additional heat from exhaust gases. They’re more efficient and can use PVC or CPVC vent pipe because exhaust temps are much lower.
Condensing models cost more upfront but save more on energy long-term.
UEF Rating (Uniform Energy Factor)
The UEF is the standard measure of a water heater’s energy efficiency. A higher number means a more efficient unit. Use this table to match your home’s usage:
Usage Level | Daily Usage (Gallons) | Max GPM (Tankless) |
Very Small | 10 | Less than 1.7 |
Low | 38 | 1.7 to 2.8 |
Medium | 55 | 2.8 to 4.0 |
High | 84 | 4.0 or more |
ENERGY STAR Certification
ENERGY STAR certified gas tankless water heaters reach a thermal efficiency of at least 90%. They use about 50% less energy than standard tank water heaters. In California and several other states, you may qualify for a utility rebate when you purchase a certified unit. Always check with your local utility before buying.
NOx Emissions Standards
If you’re in California, some states in the Northeast, or certain air quality districts, gas water heaters must meet low NOx or ultra-low NOx emission requirements. NOx (nitrogen oxides) contribute to air quality problems. Confirm your unit is compliant before purchase or you may fail inspection.
LEED Rating Consideration
If your home or building is pursuing LEED (Leadership in Energy and Environmental Design) certification, many tankless condensing models qualify. Benefits include tax incentives, lower energy costs, and improved air quality credits.
Flow Rate and Sizing
Undersizing is the most common mistake homeowners make. Here’s how to get it right:
- List every hot water fixture you might run at the same time.
- Add up the GPM of those fixtures (shower = ~2.0 GPM, dishwasher = ~1.5 GPM, kitchen faucet = ~1.0 GPM).
- Know your groundwater temperature. Southern California groundwater averages 65–70°F. Northern states average 35–45°F in winter.
- Calculate the temperature rise needed (target temp minus incoming temp). For LA, that’s roughly 50°F. For Minnesota, it could be 75°F or more.
- Find a unit rated to handle your GPM at that temperature rise.
Always size up slightly. A unit with a little extra capacity is far better than one that maxes out every morning.
Gas Line and Electrical Panel Upgrades
- Gas models: Tankless burners use more BTUs than traditional tank heaters. You will almost certainly need to upsize your gas line from the manifold. The supply line size must comply with ANSI Z223.1/NFPA 54 (National Fuel Gas Code) or local code.
- Electric models: These pull 120 to 200 amps. Most older homes need a panel upgrade. Some models require two dedicated double-pole breakers ranging from 40 to 70 amps each. The recommended wire size for most units is 6-gauge copper (rated 65 amps), though some models allow 8-gauge, always check your installation manual.
Permits
Most cities and counties require a permit for tankless hot water heater installation. Skipping it can cause serious problems when you sell your home or file an insurance claim. Contact your local building department before you start work.
Tools and Materials Needed
For all installations:
- Pipe wrenches and adjustable pliers
- Teflon tape (pipe thread tape)
- Pipe cutter
- Level
- Drill and masonry bits
- Bucket and garden hose
- Voltage tester
- Isolation valve kit (cold inlet + hot outlet) these are not optional
For gas installations:
- Gas leak detector (or liquid dish soap for bubble testing)
- Category III stainless steel vent pipe (non-condensing) or PVC/CPVC (condensing)
- Gas shutoff valve
- Sediment trap / dirt leg
- Expansion tank (if recirculation is used)
For electric installations:
- Double-pole circuit breakers (correct amperage per your unit’s manual)
- 6-gauge copper wire (or 8-gauge on approved models)
- Voltage tester
Step-by-Step Guide: How to Install Tankless Water Heater
Part 1: Preparing and Removing the Old Unit
Step 1: Shut everything off
Turn off the main water supply. For gas units, close the main gas shutoff valve. For electric units, flip the circuit breaker to the off position. Open a hot water faucet somewhere in the house to release pressure. Let it drip until it stops completely.
Step 2: Drain and disconnect the old unit
Connect a garden hose to the drain valve on your old tank and drain it fully. Open a faucet upstairs to prevent a vacuum lock. Disconnect the cold water inlet and hot water outlet. Capture remaining water in a bucket. For gas units, disconnect the gas line at the union fitting. For electric units, cap the wires after confirming the breaker is off. Remove the vent pipe. Dispose of the old unit at a recycling center or scrapyard.
Part 2: Installing a Gas Tankless Water Heater
Step 3: Plan your vent system first
Do not reuse old vent lines. Tankless gas units require new venting. You have three options:
- Direct vent: Uses two concentric pipes one pulls combustion air from outside, one exhausts outside. Condensate traps are required.
- Power vent: A fan pushes exhaust out through a single pipe.
- Atmospheric vent: Natural draft less common in modern units.
Keep vent runs as short as possible. Observe all minimum clearances listed in your manual. Do not exhaust near air intake devices, windows, or doors. Horizontal sidewall and vertical roof terminations are both permitted.
Step 4: Upgrade the gas line if needed
This step is critical. Consult a licensed plumber or your gas utility if you’re unsure about sizing. The supply line size depends on the unit’s BTU rating and the distance from the gas manifold. A 150,000 to 200,000 BTU gas tankless unit requires a significantly larger gas supply than a traditional 40,000 BTU tank heater.
Step 5: Mount the new unit
Choose a location close to the point of use. Check required horizontal and vertical clearances from your manual. Fasten the unit to the wall studs using the supplied mounting hardware. Confirm it is level and stable these units get heavy when water fills the lines.
Step 6: Connect the gas line
Install a gas shutoff valve directly on the gas supply line. Connect the gas line to the heater. Install a sediment trap (dirt leg) to keep debris out of the burner. This is a code requirement in most jurisdictions.
Step 7: Connect water lines
Install the isolation valve kit on both the cold water inlet and the hot water outlet. These valves are mandatory not optional. They allow you to flush the heat exchanger with a descaling solution each year without cutting the pipes. Without them, mineral buildup will eventually destroy the unit.
Install a manual shutoff valve on the cold water line. Flush the cold water line briefly before connecting it to the unit to clear any debris. If your home water pressure exceeds 80 PSI, install a pressure-reducing valve on the cold water inlet. High pressure damages internal components over time.
Use copper pipe or PEX-B depending on your local code. Wrap all threaded connections with Teflon tape. Snug tight do not over-torque.
If your home has a closed plumbing system, install a small expansion tank on the cold water line near the unit. Closed systems have no place for thermally expanded water to go. Without the expansion tank, pressure spikes can damage the heater.
Step 8: Install the pressure relief valve
A pressure relief valve (PRV) rated at 150 PSI is required by code. Install it directly on the hot water outlet. Connect discharge piping from the PRV that runs to a floor drain. This is a safety device never cap or remove it.
Step 9: Install a thermostatic mixing valve (recommended)
A thermostatic mixing valve blends cold water into your hot supply at point-of-use fixtures. It prevents scalding while allowing the heater to run at a higher temperature for better efficiency. Most professional installers include one.
Step 10: Check for leaks — water and gas
Turn on the water supply. Inspect every connection visually and by feel. Fix any drips before moving forward. Turn the gas supply on slowly. Use a gas leak detector or apply soapy water to all gas connections. Look for bubbles. If you detect a leak, turn the gas off immediately and do not proceed until the leak is fixed.
Step 11: Install the vent system
Install the exhaust vent and the inlet air vent (for indoor applications). Follow your manual exactly for pipe material, diameter, and termination clearances. Secure all joints.
Step 12: Purge air from water lines
Turn the water supply back on fully. Open all hot water faucets connected to the unit and let them run until the flow is smooth and air-free.
Step 13: Start up the unit
With water flowing, turn on the gas and close the circuit breaker to power the unit. Adjust the DIP switch settings per your manual to calibrate for your installation. Press the on/off button. Turn on a hot water faucet and test for normal operation. Set the thermostat to 120°F (49°C). This is the safe, recommended temperature for most households.
Part 3: Installing an Electric Tankless Water Heater
For electric models, follow Steps 1–2 for removal, then Steps 5 and 7–9 for mounting and water connections. The electrical work differs:
Step E1: Remove the front panel
Remove the unit from packaging and take off the front cover. Disconnect the user interface display before pulling the cover there is typically a ribbon cable that must be handled carefully.
Step E2: Verify electrical capacity
Check your breaker panel. Confirm it can handle the additional load. A 12.2 kW unit draws 51 amps on a 240V supply. The largest 32 kW units draw 133 amps. Most whole-home electric tankless models require two dedicated double-pole breakers.
Step E3: Install breakers and wiring
Switch off the main supply to the breaker box before working on the panel. Install the double-pole breakers. Run 6-gauge copper wire (or 8-gauge if permitted by your specific model) from the panel to the heater location. Connect the wiring to the heater terminals per the wiring diagram in the manual. Ensure you have a proper ground connection. Work must comply with NFPA 70 (National Electrical Code) in the USA.
Step E4: Reattach the panel and start up
Reconnect the user interface display. Insert the ribbon cable in the correct orientation and do not force it. Reattach the front panel. Do a final check of all water and electrical connections. Turn on the water supply. Flip the circuit breaker on. The unit will begin heating water immediately. Set the thermostat to 120°F.
How Much Does It Cost to Install a Tankless Water Heater?
Here is a realistic cost breakdown for 2026:
Item | Cost Range |
Electric tankless unit | $300 – $800 |
Gas tankless unit | $500 – $2,000+ |
Professional labor (electric) | $300 – $700 |
Professional labor (gas) | $700 – $1,500 |
Gas line upgrade | $250 – $1,200 |
Electrical panel upgrade | $300 – $2,000 |
Vent system materials | $150 – $500 |
Permits | $50 – $250 |
Total (electric, basic) | $600 – $1,500 |
Total (gas, full conversion) | $1,500 – $5,000+ |
The tankless installation is a bigger upfront investment than replacing a tank heater, but the energy savings and 20-year lifespan make the math work in your favor. Factor in any ENERGY STAR rebates from your utility these can reduce your out-of-pocket cost by $100 to $800 depending on your state.
Common Installation Mistakes to Avoid
- Skipping the isolation valve kit This is the most expensive mistake you can make. Without isolation valves, you cannot flush the heat exchanger annually. Mineral buildup destroys the unit within a few years. Always install them on both the inlet and outlet.
- Undersizing the unit Buying based on peak GPM rating alone is not enough. Always calculate your required temperature rise first, then find the GPM at that rise in the spec sheet. A unit rated at 9 GPM at 35°F rise may only deliver 5 GPM at a 70°F rise.
- Undersizing the gas line Installing a high-capacity burner on an undersized gas supply is like putting a powerful engine in a car with a garden hose for a fuel line. You will get poor performance, error codes, and possibly a failed inspection.
- Reusing old vent pipe Old vent lines are not compatible with tankless systems. Category III stainless steel for non-condensing, PVC/CPVC for condensing. Always install new venting.
- Skipping the sediment trap on the gas line Debris in the gas line damages the burner. A sediment trap (dirt leg) is a code requirement in most areas and takes minutes to install.
- Ignoring hard water If your area has hard water, install a water softener or whole-house descaler upstream of the unit. Calcium and lime build up inside the heat exchanger fast and reduce flow. Plan for annual flushing with a descaling solution regardless.
- Turning on power before the water is purged For electric units, never energize the unit until all air is purged from the lines and water flows freely through the heat exchanger. Running the elements dry burns them out instantly.
- Ignoring closed plumbing system requirements If your home has a closed plumbing system (a common backflow preventer or check valve on the main line), you must install an expansion tank. Without it, thermal expansion creates pressure spikes that will damage the unit and your pipes.
When to Call a Professional
DIY tankless installation is doable for electric units if you are comfortable with basic plumbing and electrical work. However, some jobs require a licensed plumber or HVAC technician. Call a professional if:
- You need to run a new gas line or upsize an existing one
- Your electrical panel needs an upgrade
- You are converting from a tank heater to a tankless system (more complex venting and gas work)
- Your local code requires permits with licensed inspection
- You are not confident about any step in this guide
Gas leaks and faulty electrical work are serious hazards. There is no shame in calling a pro; it is often the smart, safe, and cost-effective choice.
Find A Local Water Heater Professionals
If you are in the Los Angeles area, Derks Plumbing specializes in Tankless Water Heater Installation in Eagle Rock and surrounding communities. Our licensed plumbers handle everything gas line sizing, new venting, code-compliant permits, and full system setup. We calculate exactly what your home needs based on your actual water usage, GPM requirements, and local building codes. No guesswork.
Whether you need a simple swap or a full conversion from a traditional tank system, we get it done right the first time. Contact us or fill out our contact form to schedule your installation.
Conclusion
Tankless water heater installation is a real project, but it is manageable when you understand the steps. Choose the right unit for your home’s GPM demand and temperature rise. Upgrade your gas line or electrical panel before you start. Install isolation valves with no exceptions. Follow the vent requirements for your specific model. And always pull a permit.
Done right, your new on-demand system will deliver consistent hot water and lower energy bills for two decades or more. If any part of this process feels uncertain, especially the gas line or electrical work, hire a licensed professional. The cost of a safe installation is far lower than the cost of fixing a dangerous one.
FAQs
Can I install my own tankless water heater?
Yes, for electric models if you have basic plumbing and electrical skills. Gas installations are more complex and typically require a licensed professional, especially for gas line upgrades and venting. Always check your local permit requirements first.
What size tankless water heater do I need?
Calculate your peak flow rate (GPM) by adding up the hot water fixtures you run at the same time. Then calculate the temperature rise from your incoming groundwater to your target temperature (usually 120°F). Match a unit to those two numbers. Size up slightly rather than buying the minimum.
What is the downside of a tankless water heater?
Higher upfront cost, potential need for gas line or panel upgrades, and a brief “cold water sandwich” effect between back-to-back uses. Hard water areas also require annual descaling maintenance.
Do you need special plumbing for a tankless water heater?
Yes. You need an isolation valve kit on both the cold inlet and hot outlet. If your water pressure exceeds 80 PSI, you need a pressure-reducing valve. Closed plumbing systems require an expansion tank. Gas models need a sediment trap and properly sized gas supply line.
How long does tankless water heater installation take?
A skilled DIYer typically needs 4 to 8 hours for a straightforward replacement. A licensed plumber can often complete the same job in 2 to 4 hours. Complex installations, new gas lines, panel upgrades, or full conversions from tank to tankless take longer.
Do I need a permit for tankless water heater installation?
In most cities, yes. A permit ensures the installation is inspected for safety and code compliance. Skipping it can cause problems when you sell your home or file an insurance claim. Contact your local building department before starting.
