Take some time to figure out whether the size of your current water heater meets your needs. For a tank-style heater, household size is a simple indicator of hot water needs. The first hour rating describes how much hot water a given tank can produce in a single hour. For the average family of four, a 40-gallon water heater should get the job done. For more people, estimate the necessary tank capacity (in gallons) based on the number of people in the house.

• 1 or 2 people—23 to 36 gallons
• 2 to 4 people—36 to 46 gallons
• 3 to 5 people—46 to 56 gallons
• 5 or more people—over 56 gallons (add 10 gallons per additional person)   

You want an FHR that meets or exceeds the number of gallons of hot water needed for all the activities that could be performed simultaneously.