What you gain
A tank keeps 40 or 50 gallons hot all day whether anyone uses it or not. A tankless heater fires only when a hot tap opens and heats the water as it passes through.
The U.S. Department of Energy puts a tankless heater at 8 to 34 percent more efficient than a tank, and says an ENERGY STAR model could save $100 or more a year.
It also lasts longer. The Department of Energy gives a tankless heater about 20 years and a tank 10 to 15. Manufacturers are less generous to the tank, at 8 to 12 years. The warranties follow the same pattern. A. O. Smith's standard 40-gallon gas tank carries six years. Navien covers the heat exchanger in its residential tankless units for 15.
There is no tank of stored water to rust through and empty onto the floor. And the unit hangs on the wall. Navien's largest residential model is about 17 inches wide, 27 inches tall and 13 inches deep, and weighs 77 pounds.
What it needs
This is where the price comes from. A gas tankless heater needs five things, and most of them are new work.
A vent to the outside
Rinnai's installation manual says the exhaust must be vented directly to the outside. It also says not to connect the vent to an existing vent or chimney, and not to use galvanized pipe. So the metal flue the old tank used cannot be reused.
The new vent is usually 2-inch plastic pipe, or a pipe inside a pipe, run out through an outside wall. Rinnai wants it to end at least 12 inches above the ground or the expected snow level. A heater in the middle of a basement, far from an outside wall, means a longer run. Navien allows up to 75 feet of 2-inch pipe.
Outside air
The burner needs air. Most installations bring it in from outdoors through a second pipe beside the exhaust, or through the outer half of a concentric pipe.
The alternative is to burn the air in the room, and the room has to be large. The gas code figure Rinnai quotes is 50 cubic feet of open space for every 1,000 BTU an hour. For a 199,000 BTU unit that is about 10,000 cubic feet. A basement 30 feet by 40 with a seven-foot ceiling is 8,400.
More gas
A standard 40-gallon gas tank burns 40,000 BTU an hour. Residential tankless units run from 130,000 up to about 199,000, because they have to heat the water in the few seconds it takes to pass through. That is as much as five times the gas while it is running.
The pipe that fed the tank may not carry that. Navien says its units can work on a half-inch gas pipe up to 24 feet long. Past that, the line has to be bigger. Ask the plumber to check the gas line before quoting, and ask whether anything has to change at the meter.
An outlet
The unit needs a grounded 120-volt outlet for its controls and fan. It will not make hot water during a power outage.
A drain
The efficient models are condensing units. They pull so much heat out of the exhaust that water condenses inside, and that water has to run to a drain.
Flow, and cold water
A tankless heater does not run out, but it can only heat so much at once. The Department of Energy's general figure is two to five gallons a minute, and it notes that a house with heavy demand may need more than one unit.
Larger units do better, and the number depends on how cold the water is coming in. Navien rates its largest residential model at 11.2 gallons a minute when it has to raise the water 35 degrees, and 5.6 when it has to raise it 67. Incoming water is coldest in winter, so size the heater for January.
Hard water
Scale builds up inside the heat exchanger, and the fix is to flush the unit with a descaling solution. Rinnai's schedule goes by hardness. Under 60 milligrams per liter it calls for no flushing. From 61 up it calls for a flush once a year. At 200 and over it requires a water softener or a scale control device.
MWRA water is about 16 milligrams per liter, so Quincy, Milton, Framingham and the other MWRA towns are in the first group. Wellesley's water tests at 121 to 142, and Sudbury's wells run from 55 to 194. In those towns the yearly flush is part of owning one. Where each town's water comes from.
What it costs
Massachusetts plumbers who posted prices in 2026 put a tankless conversion at $3,800 to $8,500 installed. The same plumbers put a standard tank at $1,800 to $5,500. The vent, the gas line, the outlet and the drain are the difference.
In October 2026 Mass Save's water heating page listed a rebate for heat pump water heaters and none for a gas tankless heater. The federal tax credit for efficient water heaters ended with 2025.
If the tank is leaking today
A tank for a tank is the fastest job. A tankless heater can still be the right replacement, but it is a longer visit and sometimes a second one. Ask the plumber three things before deciding: where the vent would go, whether the gas line is big enough, and how long you would be without hot water.
Electric and oil houses
Everything above is about gas. Navien's units run on natural gas or propane.
There are whole-house electric tankless heaters. Rheem's largest is 36 kilowatts. At 240 volts that is 150 amps when it is running flat out, which is more than a 100-amp service carries for the whole house. Have an electrician look at the panel before pricing one.
In a house with no gas line, the usual choices are another electric tank or a heat pump water heater.