How to choose a water heater: type, size, fuel and brand

Step 1: pick the fuel and type

Your fuel and your space narrow the choice fast:

You have	Options to consider
Natural gas or propane	Gas tank, power vent or direct vent tank, gas tankless
Electric only, roomy garage or basement	Heat pump water heater, electric tank
Electric only, small closet	Electric tank, or a 120-volt heat pump model where it fits
A boiler	Indirect tank

Heat pump models need a space that stays between 40 F and 90 F with at least 1,000 cubic feet of air around them, per DOE^[11]. Our types of water heaters page compares every option side by side, and gas vs electric and heat pump vs standard electric cover the key matchups.

Step 2: size it the right way

Tanks: size by first-hour rating (FHR), not gallons. FHR is the most hot water a tank can deliver in an hour starting full^[2]. It is printed on the yellow EnergyGuide label. Estimate your busiest hour of use (showers, a dishwasher, a load of laundry) and pick a tank whose FHR meets it.

Tankless: size by flow at your temperature rise. Add the flow of fixtures you run at once. A WaterSense showerhead uses no more than 2.0 gallons per minute^[12]. Then check the model's chart at your winter rise: the setpoint minus your coldest incoming water temperature^[4].

DOE's Building America guide puts average single-family use at about 50.6 gallons a day and notes that 58% of US households have one or two people, so many homes have more tank than they need^[3]. Full method: what size water heater do I need and tankless sizing by groundwater temperature.

Step 3: compare efficiency by UEF

Uniform Energy Factor (UEF) is the federal efficiency rating. Higher is better, but only compare within the same type. ENERGY STAR floors give a sense of the range^[5]:

Type	ENERGY STAR minimum UEF
Gas tank, 20 to 55 gal	0.81 medium draw, 0.86 high draw
Gas tankless	0.95
Heat pump, integrated	3.30
Heat pump, 120 V or split	2.20

The EnergyGuide label also shows an estimated yearly operating cost, which is the easiest way to compare two models. See UEF, first-hour rating and GPM explained.

Step 4: price the install, not just the box

Labor, parts and code work add a lot to the price of the unit. HomeGuide's January 2026 figures put a standard 40 to 50 gallon tank at $600 to $3,100 installed, a heat pump unit at $2,000 to $4,600, and tankless at $1,400 to $5,600^[6][7]. The spread comes from:

• Gas line size and new venting for tankless or power vent units.
• A new 240-volt circuit or panel work for electric upgrades.
• Code items such as an expansion tank, drain pan and relief valve discharge piping.
• Permits, haul-away and access (attics and tight closets cost more).

See where to buy: store vs plumber-supplied and our cost guides.

Step 5: read the warranty, and check the build date

Warranty length is a fair signal of how long a maker expects a tank to last. ENERGY STAR requires at least 6 years on certified gas tanks and on the sealed system of certified heat pump units^[5]. Many warranties run from the date of manufacture, not the install date. Lochinvar's warranty, for example, starts 60 days after the build date shown in the serial number^[9]. A unit that sat in a warehouse has already used part of its coverage. Check the serial number before install: Rheem, for example, encodes the build month and year in the first four digits^[13]. See water heater warranties compared.

Step 6: brands

Brand matters less than people expect. Differences that matter more than the logo: warranty terms, local parts availability and whether plumbers in your area service the brand. Rheem puts typical life at 8 to 12 years for tanks and 15 to 20+ years for tankless units^[1], whatever the brand. See best water heater brands compared.

Step 7: rebates in 2026

The federal 25C credit is gone for new installs. The IRS says it is not allowed for property placed in service after December 31, 2025^[8]. Utility and state rebates are still available in many areas, especially for heat pump units. See the 25C status page.

Set it safely

Whatever you buy, set it no hotter than you need. The CPSC recommends 120 F to reduce the risk of tap water scalds^[10].

Every buying guide

• What size water heater do I need?
• Tank vs tankless
• Gas vs electric
• Heat pump vs standard electric
• UEF, first-hour rating and GPM explained
• Best water heater brands compared
• Tankless sizing by groundwater temperature
• Water heater warranties compared
• Where to buy: store vs plumber-supplied

By tank size: 6-gallon, 10-gallon, 20-gallon, 30-gallon, 40-gallon, 50-gallon, 55-gallon, 60-gallon, 75-gallon, 80-gallon, 100-gallon.

When to call a pro

• Changing type or fuel, or moving the heater: gas lines, venting and circuits are licensed work, often under a permit.
• Sizing a tankless unit for your winter water temperature and peak flow.
• Checking whether your electrical panel can carry an electric tankless or a new 240-volt circuit.
• Getting written quotes that list the unit, labor, code items and permit separately.