Now that you know the basics of tankless water heaters, you are probably wondering what size tankless water heater do you need to replace a 40 gallon water heater. First, it is important to understand that a tankless water heater will not provide an unlimited supply of hot water like a storage tank type water heater. Instead, it will provide a specific amount of hot water based on the model and its gallons per minute (GPM) rating. For example, if you have a household of four people with two bathrooms, each taking 10-minute showers, then you would need at least a 3 GPM tankless water heater. Keep in mind that the GPM rating is based on incoming water temperature. So, if you live in an area with cold winters, then you will need a higher GPM rating to offset the colder water temperature. In general, you will want to choose a tankless water heater that has a GPM rating that is at least double the peak demand of your household. This will ensure that you always have enough hot water for your needs. If you are unsure of what size tankless water heater you need, then it is best to consult with a professional who can help you determine the right size for your home.