These are the most compact of boilers. Condensing boilers are often hung on a wall, near the point of vent penetration out of the house. They not only take nearly all the sensible heat from their combustion gases, they are also designed to condense the water vapor in the gas to wring out the last bits of latent heat. These boilers have efficiencies above 95 percent. Because they purposefully condense water vapor, they require a way to dispose of the condensate. The condensate is acidic and cannot be sent directly to a drain, so it must be passed through a neutralizing medium, such as limestone beads. After neutralization, the condensate is sent to a drain, usually through a small pump. Condensing boilers also require a carbon monoxide detector to be installed on the floor with the boiler and on every habitable floor in the house.

Condensing boilers have a modulating burner which matches its output to the demands of its sensors and thermostat. A computer calculates the required water temperature and ramps the burner up or down.

The boilers are designed to have cool return water and combustion gases passing across one another, causing the gas and vapor to exchange their heat with the return water. The cooler the return water, the more the condensation, so condensing boilers are unusual in that they work best when water temperatures are low and condensate formation is at its highest. Conventional types of boilers must be protected from condensate because it is corrosive and therefore they have a limit on how low water temperatures are allowed to be within them – generally water must be above 135°F at all times, whereas condensing boilers happily accept water temperatures as low as room temperature for heating applications and just above freezing for snowmelt jobs. This ability to handle low water temperatures is another reason condensing boilers are so efficient. (Please see outdoor reset information).