Is a tankless water heater a good fit for a small home?

It can be. The U.S. Department of Energy says tankless (on-demand) heaters warm water only when needed, avoiding the standby heat loss of a tank, and are about 8 to 34 percent more efficient than storage heaters, with lifespans around 20 years. Their main limits are a higher upfront cost and output of about 2 to 5 gallons per minute, so running a shower and a washer at once may exceed one unit. Electric models can need large electrical service, and gas models need proper venting, so the choice should match your utilities and panel. Whatever type you choose, the CPSC recommends setting water temperature at 120 degrees F to reduce scald risk.

Sources

• Which Water Heater Is Right for You?U.S. Department of Energy, Energy Saver
• Avoiding Tap Water Scalds (Publication 5098)U.S. Consumer Product Safety Commission (CPSC)