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Question 2 of 3

How much hot water do you need at once?

Or estimate from typical use during your busiest hour (DOE Energy Saver -- Sizing a New Water Heater (peak hour demand worksheet)):
Considering a tankless heater? Size it by flow instead

A tankless heater is sized by flow, not by gallons: add up the flow rates of the hot water fixtures you run at the same time. DOE's example: a faucet at 0.75 gpm plus a shower head at 2.5 gpm needs 3.25 gpm. Not sure of a fixture's flow? Hold a bucket under it for one minute and measure.