Condensing water heater
A high-efficiency gas heater that reclaims heat from its own exhaust — cheaper to vent, pricier to buy.
A condensing water heater (most often a condensing tankless unit) squeezes extra efficiency out of the same gas by running the hot exhaust through a second heat exchanger, pulling out heat that a standard 'non-condensing' unit blows out the vent. The payoff is twofold: a higher [uniform energy factor](/glossary/recovery-rate) (often 0.90+ versus roughly 0.80–0.82 for non-condensing) and cooler exhaust that can vent through cheap PVC instead of expensive stainless steel — which often makes the *installed* cost gap smaller than the unit-price gap suggests. The trade-off is a higher sticker price and a condensate drain line that has to go somewhere. For homeowners weighing a [tankless vs tank water heater](/guides/tankless-vs-tank-water-heater-cost), condensing is usually the better long-run buy if you're staying in the home; non-condensing can win if venting runs are short and you want the lowest upfront price.