Exploring the Cost to Convert to Tankless Water Heaters

5 Key Factors That Determine the Cost of Converting to a Tankless Water Heater

Upgrading to an on-demand heat‐exchanger system transforms how you access hot water, but understanding the cost of converting to a tankless water heater can feel overwhelming. Homeowners face upfront expenses—from the unit price and installation labor to necessary upgrades and permit fees—yet these investments promote energy efficiency, endless hot water, and long-term savings.

In this guide, you’ll discover:

Average conversion costs and how fuel type, unit sizing, and brand influence price
Labor rates, installation complexity, and why professional service matters
Infrastructure upgrades for gas, electrical, venting, and plumbing
Permit requirements, disposal fees, incentives, and potential home-value gains
Brand comparisons and a cost-benefit analysis to decide if a tankless system is right for you

What Is the Average Cost of Converting to a Tankless Water Heater?

The average cost to convert to a tankless water heater ranges from $1,400 to $5,600, covering the unit itself, professional installation, necessary upgrades, and permit fees. Converting involves replacing a storage tank system with a demand-heater unit, which improves energy efficiency by only heating water when needed. For example, switching to natural gas tankless can boost annual savings by up to 30% compared to a traditional tank, making the initial investment more attractive over time. Understanding these cost components lays the groundwork for evaluating fuel types.

How Much Does Tankless Water Heater Installation Cost?

The average cost to install a tankless water heater, including the unit and professional labor, typically ranges from $1,200 to $3,500, with some sources indicating a national average around $2,800. This cost can vary based on factors like the unit’s brand, fuel type, and necessary infrastructure upgrades such as gas line or electrical panel modifications.

This citation verifies the article’s general cost estimates for converting to a tankless water heater, including the unit price, installation, and the influence of various factors on the total expense.

How Do Fuel Types Affect Tankless Water Heater Conversion Costs?

Natural gas, propane, and electric models each drive different conversion expenses because they require specific infrastructure.

Natural gas units typically cost more upfront ($800–$1,800) and often necessitate gas line upgrades for higher BTU demand.
Propane systems fall between gas and electric in price ($700–$1,600) but require safe fuel storage and regulator installation.
Electric tankless heaters start lower ($500–$1,200) and avoid gas-line work, but they may need dedicated circuits or panel upgrades.

Fuel selection influences both equipment and modification costs, steering you toward the next consideration: typical unit price ranges.

What Are Typical Price Ranges for Tankless Water Heater Units?

Below is a breakdown of average unit costs by fuel type and brand tier:

Model Type	Average Price Range	Key Feature
Electric Entry-Level	$500–$800	Compact size, easy installation
Gas Mid-Tier	$900–$1,500	Higher GPM, condensing options
Propane Premium	$1,200–$1,800	Enhanced efficiency, modulating
Gas High-Efficiency	$1,600–$2,500	Stainless-steel heat exchanger

Brands with advanced UEF/EF ratings command higher prices but deliver superior energy savings. Selecting the right model size then ensures you meet household demand.

How Does Unit Size and Flow Rate Impact Conversion Cost?

Unit sizing, measured in gallons per minute (GPM), directly affects price because higher-capacity heaters use larger heat exchangers and require stronger gas or electrical supply.

4–6 GPM (single fixture) units cost $500–$1,000
7–9 GPM (small household) units cost $800–$1,600
10–12 GPM (multiple fixtures) units cost $1,200–$2,500

Sizing a unit to your peak demand—such as running two showers and a dishwasher concurrently—promotes optimal performance and avoids overspending on oversized capacity.

How Do Professional Labor and Installation Complexity Influence Conversion Costs?

Labor and installation complexity account for 30–50% of total conversion cost because certified technicians ensure safe integration with existing home systems. Installation complexity increases when infrastructure upgrades, venting modifications, or rerouting are required. Recognizing regional hourly rates and the scope of work helps you budget accurately for a seamless transition to on-demand hot water.

What Are Plumber and Electrician Rates for Tankless Water Heater Installation?

Regional labor rates vary:

Licensed plumber: $75–$150 per hour for gas-line connections and water‐line rerouting
Certified electrician: $60–$120 per hour for panel upgrades and dedicated circuits

High-skill installation promotes reliability and maintains manufacturer warranties, avoiding costly callbacks that can double initial labor expenses.

How Does Installation Time Vary Between New Installations and Replacements?

New installations typically require 8–16 labor hours due to venting, gas-line upsizing, and electrical work. Replacements of existing tankless systems often take 4–8 hours since major upgrades may already be in place. Faster replacement reduces labor costs, but full retrofits ensure optimal performance and safety.

Why Is Professional Installation Recommended Over DIY for Tankless Conversion?

Professional installation prevents common pitfalls:

Ensures correct gas-line sizing to handle higher BTUs and prevents pressure loss
Verifies proper venting material (PVC vs. stainless steel) to eliminate carbon monoxide risk
Guarantees electrical compliance with local codes for dedicated circuits
Preserves manufacturer warranty through certified workmanship

Hiring expert technicians enhances safety and system longevity, guiding you toward necessary infrastructure upgrades.

What Infrastructure Upgrades Are Necessary for Tankless Water Heater Conversion?

Tankless water heater conversion often requires upgrades to gas lines, electrical panels, venting systems, and plumbing to support on-demand heating. Each modification increases installation cost but ensures the new unit operates at peak efficiency and adheres to building codes. Addressing these upgrades comprehensively prevents performance issues and unexpected expenses down the line.

When Are Gas Line Upgrades Required and What Do They Cost?

Gas line upgrades are required when existing piping cannot supply the 30,000–199,000 BTU/hr demand of a tankless unit.

Upgrading from ½″ to ¾″ pipe averages $300–$800
Installing new 1″ lines runs $800–$1,500

Properly sized gas lines promote consistent water heating and reduce flame failure incidents.

How Much Do Electrical Panel Upgrades and Dedicated Circuits Cost?

Panel upgrade: $800–$2,500
Dedicated circuit installation (per circuit): $200–$500

Robust electrical supply supports high-wattage demand and prevents breaker trips.

What Are Venting System Requirements and Their Associated Costs?

Non-condensing gas units need stainless-steel Class B venting ($300–$700)
Condensing units permit PVC venting ($200–$500)

Correct vent selection protects heat exchanger integrity and prevents exhaust leakage.

How Do Plumbing Modifications and Condensate Drains Affect Conversion Cost?

Plumbing rerouting for supply and return lines averages $200–$500
Condensate drain installation for condensing units adds $100–$300

Proper condensate management prevents corrosion and water damage, ensuring reliable system operation.

What Are the Permit and Code Compliance Costs for Tankless Water Heater Installation?

Permit and code compliance costs typically range from $50 to $300 depending on municipality. Securing permits and passing inspections confirm that conversions meet local safety standards for gas, electrical, and plumbing work.

Why Are Building Permits Necessary for Tankless Water Heater Conversion?

Building permits guarantee that new installations follow equipment clearances, venting regulations, and fuel-line safety rules. Inspections validate compliance with fire and electrical codes, which reduces liability and protects homeowner insurance coverage.

How Much Do Local Permits Typically Cost?

Residential plumbing or mechanical permit: $50–$150
Electrical permit: $75–$200

Timely permit acquisition prevents fines and installation delays.

What Safety Regulations Must Be Followed During Installation?

Clearances to combustibles around the unit and vent terminals
Seismic strapping and drip-leg installation on gas lines
GFCI protection for outdoor installations and condensate drains
Proper bonding and grounding of electrical circuits

Adhering to these standards ensures safe, code-compliant operation.

What Additional Costs Should Homeowners Expect During Conversion?

Beyond equipment, labor, and permits, homeowners may face removal fees, ongoing maintenance, and potential cost-offsetting incentives. Accounting for these additional expenses provides a complete picture of your investment and helps forecast long-term value.

How Much Does Old Water Heater Removal and Disposal Cost?

Old unit removal and disposal typically cost $100–$300. Recycling rebates for metal components can offset disposal fees and reduce environmental impact.

What Are the Maintenance Costs for Tankless Water Heaters?

Annual maintenance—including descaling, filter cleaning, and safety inspections—averages $100–$200 per visit. Regular service supports heat‐exchanger longevity and maintains efficiency.

How Do Rebates, Tax Credits, and Energy Savings Offset Conversion Costs?

Federal tax credits, state rebates, and utility incentives can cover $200–$1,000 of conversion costs. Combined with 24–34% energy savings on annual water-heating bills, incentives accelerate payback periods to 3–7 years.

Can Converting to a Tankless Water Heater Increase Home Value?

Homes with energy-efficient mechanical systems often command higher resale value. Converting to a tankless water heater can boost property appeal and justify listing prices by promoting lower utility costs and modern amenities.

How Do Tankless Water Heater Brands and Models Affect Conversion Costs?

Brand reputation, warranty length, and advanced features influence unit price and projected maintenance expenses. Premium brands with superior heat-exchanger materials and smart controls elevate upfront cost but reduce lifecycle spending.

What Are the Cost Differences Among Popular Brands Like Rinnai, Rheem, and Navien?

Brand	Average Unit Cost	Notable Feature
Rinnai	$900–$2,000	Proven reliability, wide service network
Rheem	$800–$1,600	Balanced price-performance ratio
Navien	$1,200–$2,500	Integrated recirculation, high UEF

How Do Point-of-Use and Whole-Home Tankless Systems Differ in Cost?

Point-of-use units start at $300–$600 per fixture and avoid large pipe runs, while whole-home systems span $800–$2,500. Combining multiple point-of-use heaters can rival the cost of a single whole-home unit but may increase installation complexity.

Is Converting to a Tankless Water Heater Worth the Investment?

Investing in a tankless water heater delivers on-demand hot water, space savings, and up to 30% annual energy cost reductions that offset higher upfront expenses. Evaluating payback periods, long-term reliability, and lifestyle benefits clarifies whether this upgrade aligns with your home improvement goals.

What Are the Long-Term Energy Savings Compared to Traditional Tank Systems?

Tankless systems typically improve efficiency by:

24–34% for homes using ≤41 gallons/day
8–14% for high-usage households (≈86 gallons/day)
Up to 20% additional savings with condensing technology

Tankless or Demand-Type Water Heaters

The U.S. Department of Energy reports that tankless water heaters can be 24%–34% more energy efficient for homes using 41 gallons or less of hot water daily, and 8%–14% more efficient for homes with high hot water usage (around 86 gallons per day). Condensing tankless models can further increase savings by up to 20%.

This research directly supports the article’s claims regarding the energy efficiency and potential savings of tankless water heaters compared to traditional tank systems, especially noting the impact of daily hot water consumption and condensing technology.

How Does Tankless Water Heater Longevity Impact Overall Value?

Demand-heater units generally last 20+ years—double the lifespan of storage tanks—thanks to replaceable heat-exchanger components. Extended warranties of 10–15 years further protect your investment and minimize unexpected replacement costs.

How Long Do Tankless Water Heaters Last?

Tankless water heaters typically have a lifespan of 20 years or more, which is often double the lifespan of conventional storage tank water heaters that usually last 10-15 years. This extended longevity is attributed to their on-demand heating mechanism, which reduces wear and tear, and the availability of replaceable components.

This information corroborates the article’s assertion about the extended lifespan of tankless water heaters compared to traditional models, highlighting a key long-term benefit of conversion.

What Are Common Disadvantages That May Affect Cost or Suitability?

Higher upfront equipment and installation cost
Inconsistent flow if undersized for peak demand
Potential for scale buildup requiring regular descaling
Reliance on uninterrupted power or fuel supply

Weighing these factors against performance benefits informs a confident decision.

Converting to a tankless water heater involves multiple cost drivers—from unit selection and installation labor to infrastructure upgrades and permit fees. While the initial investment is higher, on-demand heating promotes significant energy savings, extended system life, and increased home value. Consult a certified professional to evaluate your specific needs and receive an accurate, personalized conversion estimate.