To find the right tankless water heater size, start with your peak hot water demand. Add the flow rates of fixtures that may run together. For example, two showers at 2.5 GPM each and a kitchen faucet at 2.2 GPM create a total demand of 7.2 GPM. You also need to calculate the temperature rise. Subtract your winter groundwater temperature from the usual 120°F target.
Your climate affects the required size. At 40°F groundwater, you may need an 80°F temperature rise. At 65°F, the rise may be only 55°F. Higher demand and a greater temperature rise require more heating capacity.
Check your home's gas line or electrical panel before choosing a unit. Some systems may require a 3/4 inch gas line or an electrical upgrade.