Water heater sizing is deceptively simple. The wrong approach is to pick a tank size based on the number of bathrooms and call it done. The right approach is to calculate your peak-hour hot water demand, determine the required first-hour rating, and match that to a water heater that can deliver. The first-hour rating, not the tank size, is the number that tells you whether the heater can keep up with your household.
The other critical factor most people miss is recovery rate. A big tank with a weak burner or element is just a large container of cooling water. A smaller tank with a powerful burner recovers faster and may outperform the bigger unit. Understanding the interplay between storage capacity and recovery rate is the key to getting the right water heater for your situation.
First-Hour Rating: The Number That Actually Matters
The first-hour rating (FHR) is the total gallons of hot water a heater can deliver in one hour, starting with a fully heated tank. It combines the stored hot water in the tank with the amount the burner or element can heat during that hour. The FHR is printed on the EnergyGuide label of every tank water heater sold in the US.
To determine your required FHR, estimate your peak-hour hot water demand. This is the hour of the day when you use the most hot water, usually morning or evening. Add up: showers (10-15 gallons each at typical flow rates), baths (20-30 gallons each), dishwasher running (6-10 gallons), clothes washer hot cycle (7-15 gallons), and hand washing and food prep (2-5 gallons). A family of four with two people showering and running the dishwasher in the same hour might have a peak demand of 45-55 gallons.
Match your peak-hour demand to the FHR on the water heater label. If your peak is 50 gallons, choose a heater with an FHR of at least 50. Going slightly larger is good insurance. Going much larger wastes energy on standby losses from heating water you will not use.
Common trap: a 50-gallon gas tank might have an FHR of 70 gallons because the gas burner recovers quickly. A 50-gallon electric tank might have an FHR of only 58 gallons because the electric element is slower. The gas heater with its higher FHR serves a larger household despite the same nominal tank size.
Gas example: 40-gal tank + 40 GPH recovery = 80 FHR
Electric example: 50-gal tank + 21 GPH recovery = 71 FHR
Match your peak-hour demand to the FHR, not the tank size.
Water Heater Sizing Calculator
Size residential and light-commercial water heaters. Calculate first-hour rating, recovery rate, tank size, and compare energy costs across fuel types.
Recovery Rate by Fuel Type
Recovery rate is how many gallons per hour the heater can bring from cold to hot while drawing from the tank. It depends entirely on the BTU input and the temperature rise. The formula is: GPH = BTU_input / (8.33 times temperature_rise times 1.0 for gas efficiency adjustment).
A standard gas water heater with a 40,000 BTU burner and 70-degree F temperature rise (50-degree inlet to 120-degree delivery) recovers about 40 gallons per hour. A high-efficiency condensing gas unit with 50,000+ BTU input recovers over 50 GPH.
A standard electric water heater with a 4,500-watt element (about 15,350 BTU equivalent) recovers only 21 gallons per hour at the same temperature rise. This is why electric tanks are typically sized 10-20 gallons larger than gas tanks for the same household. The lower recovery rate means you need more stored water to cover peak demand.
Heat pump water heaters have even slower recovery in heat pump mode (about 10-15 GPH) but use roughly one-third the electricity. Most heat pump units have a backup electric resistance element that kicks in during high demand, boosting recovery to standard electric rates at the cost of efficiency. If you size the tank correctly and the heat pump handles 90%+ of the demand, the annual energy savings are substantial.
Gas (40,000 BTU): ~40 GPH
Gas (50,000 BTU): ~50 GPH
Electric (4,500W): ~21 GPH
Heat pump (HP mode): ~10-15 GPH
Heat pump (hybrid mode): ~21 GPH
Tank vs Tankless: When Each Makes Sense
Tank water heaters store a reserve of hot water that is always ready. They are simpler, cheaper, and work well when peak demand is predictable and bounded. The main disadvantage is standby heat loss: the tank loses heat continuously even when no one is using hot water. Modern tanks with foam insulation lose 1-2 degrees F per hour, which adds $100-200 per year in standby energy costs.
Tankless (on-demand) water heaters heat water only when a tap opens. No standby loss, no running out of hot water during long showers. But they have a maximum flow rate in GPM that depends on the temperature rise. A unit rated for 8 GPM at a 35-degree rise might deliver only 4 GPM at a 70-degree rise. In northern climates with cold groundwater, this can be limiting.
Tankless shines in households with unpredictable demand patterns, vacation homes, or where natural gas is available (electric tankless units require massive electrical service, often 100+ amps at 240V). Tankless struggles in cold climates with simultaneous high-demand scenarios like two showers plus a dishwasher.
The price premium for tankless is $1,000-2,000 over a tank unit, installed. Energy savings are typically $100-200 per year. Payback is 5-15 years. Tankless units last longer (20 years vs 10-15 for tanks), which helps the lifetime economics. But if the installation requires upgrading the gas line, venting, or electrical service, the additional cost can extend payback significantly.
Fuel Cost Comparison: Gas vs Electric vs Heat Pump
Annual operating cost depends on the fuel price, the heater's efficiency (energy factor or uniform energy factor), and your hot water consumption. A typical household uses 50-60 gallons of hot water per day. At that usage level, the annual energy cost ranges from $150 to $600 depending on fuel type and efficiency.
Natural gas at $1.00/therm with a 0.67 UEF tank: about $250/year. Electric resistance at $0.12/kWh with a 0.93 UEF: about $450/year. Heat pump at $0.12/kWh with a 3.0 UEF: about $150/year. Propane at $2.50/gallon with a 0.60 UEF: about $650/year.
The heat pump water heater is the cheapest to operate in most areas where electricity costs less than $0.20/kWh. But it costs $1,200-1,800 installed versus $800-1,200 for a standard electric tank. The 3-5 year payback makes it worthwhile for most homeowners who are replacing an electric tank. Replacing a working gas tank with a heat pump unit is harder to justify on economics alone because gas is cheap in most of the US.
Propane water heaters are the most expensive to operate in nearly all scenarios. If you are on propane, a heat pump water heater is almost always the better economic choice, with payback under 3 years in most cases.
The Oversizing Problem
Contractors and homeowners both tend to oversize water heaters. The logic sounds reasonable: bigger tank means more hot water means happier customers. But oversizing wastes energy and money. A 75-gallon tank costs more to purchase, more to install (heavier, may not fit existing space), and more to operate (higher standby losses from larger surface area). If the household peak demand is 50 gallons, a 50-gallon gas tank with a high FHR serves them better than a 75-gallon tank with a mediocre burner.
The other oversizing trap is commercial buildings. Restaurant water heater sizing is driven by the dishwasher and pot sink, not the number of bathrooms. A 50-seat restaurant might have a 200-gallon storage tank because the commercial dishwasher uses 70+ gallons per hour during peak service. But a small office with a break room kitchenette and two bathrooms might be well served by a point-of-use tankless unit under the sink and a small 20-gallon tank for the restroom.
Right-sizing means matching first-hour rating to peak demand with a modest margin, not buying the biggest unit that fits the space. The calculator approach eliminates guesswork and gives you a defensible sizing basis for the customer and the inspector.