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Water heaters are typically installed out of sight, probably in a closet or basement, so most homeowners don’t pay much attention to them. That is — until the day a cold shower is their only option.
Water heaters typically last eight to 12 years. If yours is at least 10 years old, it may be time to budget for the cost of a water heater replacement.
In this article:
When to replace or repair your water heater
In many cases, a water heater will suddenly fail. However, homeowners may also notice some signs that their water heater is deteriorating. Depending on the age of your appliance and the issues you notice, you may be able to repair your water heater rather than pay to replace it — some inexpensive repairs including adjusting the thermostat or replacing a valve.
Before deciding whether to fix or replace your water heater, check the appliance warranty to see if you still have coverage. If you have a home warranty policy, that may cover a repair or replacement of your water heater.
If your water heater is at least 10 years old, replacing it is usually the better option since it is near the end of its lifespan. Here are a few other signs that your water heater may need replacement:
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Corrosion around the water lines or the water heater
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Rusty water from your faucets or showerhead
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Rumbling noises
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Limited or no hot water
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Water leaks
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Sediment in your water tank
Learn more: Home warranties — Costs, coverage, and how they work
Water heater replacement cost
If you’ve decided to replace rather than repair your water heater, you’ll want to prepare for the cost. According to the home services website Angi, hot water heater replacement costs typically range from $882 to $1,807, with the average cost being $1,327. Angi estimates that, depending on the size, installing a traditional tank water heater costs $600 to $2,500.
The least expensive option will likely be replacing your water heater with the same size and type as you already have since that typically won’t involve additional plumbing or remodeling costs to accommodate a different appliance. However, a new model may still be taller or wider even if it has the same capacity as the water heater you are replacing.
Your costs could be higher if you choose to upgrade to a new water heater with more storage, switch from a traditional tank water heater to a tankless model, or switch from gas to electric.
Factors that impact water heater replacement cost
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Type of water heater. According to Angi, installing a tankless water heater typically costs $1,400 to $3,900. However, tankless ones often last 20 years and are more energy-efficient than traditional water heaters. You may save money on water and electricity bills, and it could be worth the cost if you plan to stay in the home for a long time.
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Size of water heater. You can install a 30-gallon water heater for a small household or up to an 80-gallon water heater for a large household that uses a lot of hot water. A 30-gallon water heater can cost as little as $700 to $2,100, while an 80-gallon water heater can cost as much as $1,300 to $7,500 to install, according to Angi.
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Fuel source. Electric water heaters don’t require venting, but gas and propane water heaters need a direct vent, such as a chimney or pipe, or a power vent with a blower. Switching from one type of fuel source to another or relocating your water heater can significantly increase the cost of replacing it.
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Labor costs. Labor costs for a new water heater installation vary widely by location and by the difficulty of the job. Labor usually accounts for about 50% of the total water heater replacement cost, depending on how long the job takes. According to Angi, plumbers typically charge $45 to $200 per hour, and electricians charge $50 to $100 per hour.
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Permits. If you are installing a new type of water heater or moving a water heater to a new location, you may be required to obtain a permit for the job, which could add $25 to $300 to the cost of replacing a water heater.
Can you DIY a water heater replacement?
Hiring a professional is highly recommended unless you are trained as a plumber or electrician and have experience installing a water heater. Replacing a water heater involves plumbing and hooking up the appliance with gas or electricity, which can be dangerous for an inexperienced homeowner. If the water heater is not properly installed, it could cause a gas leak, a carbon monoxide leak, water damage, or even a fire.
You’ll also need to know the correct size water heater for your household and space. In some cases, permits and an inspection are required to install a water heater.
Homeowners insurance, a home warranty policy, and the warranty on the water heater are unlikely to apply to an improperly installed appliance.
Dig deeper: What does homeowners insurance cover?
Financing options for replacing your water heater
While the total cost to replace a hot water heater varies widely, you may spend nearly $4,000 on a tankless water heater or as much as $7,500 if you replace a large one or need extensive work for the installation.
As with any home improvement project, there are several ways to pay to replace a water heater. Here are some options:
Cash
An emergency savings or special savings account for home improvements is useful when you must urgently replace an appliance. You don’t incur any debt this way, although you will want to replenish your savings.
Personal loan
Personal loans typically have high borrowing limits, but they often have a short repayment term, fees, and a relatively high interest rate, depending on your credit profile.
Learn more: Can you get a personal loan fast in an emergency?
Credit card
A credit card can quickly pay for a water heater replacement, especially if you can pay off the balance fast. If you have the funds to pay off the balance easily, this method could earn you rewards. However, credit cards typically have higher interest rates and lower limits than personal loans. And if you can’t afford to repay the balance promptly, you could find yourself in financial trouble.
Retail financing
Some retail stores and manufacturers offer financing for water heaters. You can compare the rates and terms of these options with your credit card or personal loan to see if you can save on interest charges. Ask about financing options for members at your local store or bigger-name companies such as Lowe’s and The Home Depot.
Home equity loan
You may qualify for a home equity loan if you have at least 20% or more equity. This is a second mortgage that lets you borrow from the equity you’ve built in your home, and you’ll receive the cash in one lump sum. A HEL typically has a lower interest rate than credit cards, and the interest rate is fixed. However, you will need to pay closing costs for the loan, and unlike some other financing options, a HEL uses your house as collateral.
Read more: What is a home equity loan? A complete overview
Home equity line of credit
A home equity line of credit (HELOC) is another type of second mortgage that allows you to tap the equity in your house. It acts as a revolving line of credit, so you only need to borrow as much as you need. While similar to a home equity loan, a HELOC typically has a variable rate.
Keep learning: What is a HELOC, and how does it work?
Water heater replacement FAQs
Do you need a permit to replace a water heater?
Possibly. Depending on your local laws, if you are replacing one water heater with a similar size and type, you may not need a permit. However, if you are installing a gas water heater or changing the plumbing or electrical connections, you may need a permit, which could cost between $25 and $300, according to Angi.
Do you have to replace a water heater with one that’s the same size?
No. While it is generally less costly to replace a hot water heater with one of the same size, you can choose to upgrade to a larger one or downsize depending on the number of people in your household, how much hot water you use, and how much space you have for the appliance.
Can you repair a water heater instead of replacing it?
Yes, depending on the issue and the age of your water heater, repairing it can be a better — and much more affordable — option than replacing it. Also, your water heater or home warranty policy may cover a repair.
This article was edited by Laura Grace Tarpley.
