Most homeowners eventually need to replace their home hot water heater because the old one leaks, stains water or just isn't big enough. Take the time to learn what a new hot water heater might cost, so you'll have no trouble staying under budget.
Not all problem water heaters need to be replaced. A tank with a leaky valve or drain or a water heater with a burnt-out heating element may be repairable. ConsumerReports.org recommends repairing your water heater when the repair cost comes to $50 or less annually over the years remaining on the warranty.
If your current 40-gallon tank doesn't provide enough hot water, consider upgrading. Lowes recommends a 30- to 40-gallon heater for two to three people but suggests upgrading if your household includes four or more. A 50-gallon tank costs about 15 to 30 percent more than a 30 or 40 gallon model.
Gas water heaters usually cost more than electric models but are cheaper to operate. Gas models come in both traditional large-tank styles and tankless models. According to CostHelper, a traditional gas tank costs between $250 and $1,000 as of 2011. Tankless water heaters tend to cost between $200 and $1,200 as of 2011 and supply hot water with no delay, but they may not work well for large households.