Yes you will need to filter the water before it gets to the tank. We have one of these, tho we live in the village so no filter is needed, and it is great. It takes up less space, more energy efficiant and you don't need to wait for the water to heat up or rather it doesn't take as long for the water to heat up. Plus there's no pilot light that's always on. Oh and when you file your taxes, you'll get an extra $300 credit too (I think that's how much we got for it) but only a one time credit. When you install one, make sure there's adequate room for the exhaust vent. When it snows alot, you'll have to make sure there's no snow infront of it or you won't get any hot water. Know this too well, especially after it storms all night, and you get up to take a shower in the morning and there's no hot water. Hope this info helps. It's a great investment! Only thing is if you do have hard water, you will need a filter. Good luck!