How to Decide Between Condensing vs. Non-Condensing Tankless Water Heaters

Tank water heaters store 20-100 gallons of hot water and reheats throughout the day, whether you're using it or not. Tankless models only heat water when a tap is turned on. Cold water runs through a heat exchanger, gets heated by a gas burner as it flows past, and comes out of your faucet hot. Turn off the tap, and the unit shuts down until you need hot water again.

Add up how many fixtures run at once before you shop for residential tankless water heaters—that tells you the capacity you need.



Main Differences Between Condensing and Non-Condensing Models

The main difference comes down to heat exchangers and efficiency, measured in UEF, and what happens to exhaust gases:

• Non-condensing: A single heat exchanger heats the water, then vents the exhaust gases directly outside. The system, while efficient, typically has a UEF rating in the 0.80 - 0.82 range.
• Condensing: Two heat exchangers, a primary and secondary—the second one captures heat from exhaust gases before venting them, squeezing out extra warmth that would otherwise be wasted. Highly efficient, condensing tankless units typically have a UEF above 0.90 with 0.95 being Energy Star certified. Some modern condensing gas tankless heaters use a single heat exchanger, but the water passes through multiple passes to heat. 

This difference affects installation needs, upfront and operating costs, and the amount of fuel you'll use each month.

Why Heat Exchangers Matter

Not all heat exchangers are built the same. The material affects durability, heat transfer efficiency, and long-term resistance to scale and corrosion. Tankless water heaters use three main types:

• Copper Heat Exchanger: The traditional choice for tankless water heaters, copper conducts heat exceptionally well and responds quickly to temperature changes. It's found in entry-level and non-condensing models, like the ADAPT® NC, making it a cost-effective and proven option.
• Stainless Steel Heat Exchanger: Stainless steel offers greater corrosion resistance to the acidic condensate produced by condensing units, making it a natural fit for high-efficiency models. The ADAPT® SC uses dual copper and stainless steel heat exchangers, combining the heat transfer benefits of copper with stainless steel's durability.
• Single Heavy-Duty Stainless Steel Heat Exchanger: Found in the ADAPT®+, this design routes water through multiple passes within a single robust exchanger, eliminating weld points that can be failure risks. The result is maximum corrosion resistance and longevity in a compact, premium build.

Electric tankless water heaters work differently and don't need venting—compare gas vs. electric tankless water heaters to see which fits your home.

After exhaust gases heat your water in the primary heat exchanger, they often remain at 300°F or higher. Condensing units route the exhaust through a second heat exchanger wrapped around the incoming cold water line. As the gases cool down to around 100-120°F, they warm up the cold water before it reaches the primary heat exchanger where most of the heat from the burner is transferred to the circulating water. Other condensing tankless water heaters have a single heat exchanger, and water passes through it multiple times until it is heated. 

The burner operates with preheated water that has already been warmed by exhaust gases passing through the secondary heat exchanger. When the exhaust cools enough, water vapor in it turns into liquid—that's where the term "condensing" comes from. This condensate is slightly acidic and needs to drain out, which means your installation requires a drain line.

Installation and Venting Requirements For Condensing Technology

Condensing units run cooler exhaust (around 100-120°F), which changes what you need for installation:

• PVC Venting: The cooler temperatures allow you to use PVC pipe instead of metal venting, which is less expensive per foot and bends more easily around obstacles. Check your specific model's installation manual for approved venting materials.
• Drain Line: You'll need to run a drain line from the unit to a suitable floor drain, utility sink, or outside, as the unit produces acidic water during operation. This water is acidic and may require treatment before disposal. 
• Neutralizer: Some local codes require a small tank that treats the acidic condensate before it enters your drains—check your area's requirements.

Your installer will need to plan for both venting and drainage when determining where to mount the unit and calculating the total installation cost.

Non-condensing units vent exhaust at higher temperatures (300-500°F), so you need metal venting that can handle the heat:

• Metal venting required: Stainless steel or suitable aluminum venting systems handle the hot exhaust without melting or warping.
• No condensate drain needed: Since the exhaust stays hot and doesn't produce condensate, you skip the drain line entirely.
• May work with existing venting: If your old gas water heater had compatible metal venting, you may be able to use what's already there. Make sure to check with a plumbing professional to be sure.

The Cost of Non-Condensing Units

Although less energy efficient, non-condensing tankless water heaters cost less upfront than condensing models. Installation costs depend on your venting needs. Metal venting is required to handle the hot exhaust. Homes with compatible metal venting already in place from a previous gas water heater can often reuse that infrastructure. Since non-condensing units don't produce condensate, there's no drain line to install.

When Non-Condensing Models Fit Best

These units are a good fit if metal venting is already installed from your previous gas water heater. They also work well on exterior walls or other spots where adding a drain line means running pipe through multiple rooms or tight spaces. Homes in warm climates receive less payback from condensing efficiency because the incoming water temperature remains higher throughout the year.

Condensing models with 0.95 UEF use less gas to heat the same amount of water compared to non-condensing models at 0.82 UEF. How much you save depends on how much hot water you use, what you pay for gas, and the temperature of your incoming water. Colder incoming water requires more heating, which magnifies the efficiency advantage. Your local utility may offer rebates on high-efficiency models that help offset the upfront cost difference.

Environmental Impact and Carbon Footprint

Condensing units at 0.95 UEF burn less fuel than non-condensing units at 0.82 UEF to produce the same amount of hot water. A household using 50 gallons of hot water daily needs less gas with a condensing model because it extracts more heat from each unit of fuel. Lower fuel consumption creates fewer carbon emissions.

Maintenance and Longevity

Annual maintenance keeps tankless water heaters running properly. The main task is descaling—removing mineral deposits that build up inside the heat exchangers. Homes with hard water need this done more often, sometimes twice a year. Condensing models have a drain line and sometimes a neutralizer that need checking to confirm they're working. Non-condensing units skip that step. Tankless water heaters last 15-20 years with regular care. Reliable manufacturers offer 10-15-year warranties on their tankless models.

A. O. Smith offers the ADAPT® family of tankless water heaters in three tiers to match different homes and budgets. Use the water heater selector quiz to find which model fits your needs, check available rebates and tax incentives, and connect with a local professional installer for proper sizing and installation.

ADAPT® SC (Standard Condensing)

The ADAPT® SC features dual copper and stainless steel heat exchangers, achieving a 0.95 UEF energy efficiency. ENERGY STAR® certified, this model qualifies for potential rebates and tax incentives.

ADAPT®+ Premium Condensing

The ADAPT®+ features a unique single heavy-duty stainless steel heat exchanger with a 0.95 UEF efficiency and an integrated recirculation pump, delivering instant hot water at your taps.

ADAPT® NC (Non-Condensing) — Coming Soon

The ADAPT® NC incorporates a single copper heat exchanger. This entry-level option works well when you have existing metal venting or want simple installation without condensate drainage.

X3® Scale Prevention Technology

All ADAPT® models can include X3® Scale Prevention Technology, which significantly inhibits mineral buildup inside the heat exchanger. This eliminates annual descaling maintenance and extends the unit's life up to three times longer than tankless models without scale protection. The system operates without the need for external devices or cartridge replacements.

Warranty & Installation

Every ADAPT® tankless water heater includes a 15-year limited warranty. All models are installed indoors or outdoors, depending on your home's layout.