Systems and methods for controlling the output water temperature of a water heater are disclosed herein. The water heater preferably has a water inlet, heating unit, and water output. The system comprises a proportional flow restrictor placed near the water output and a controller which is configured to direct the heating unit to heat the water and the proportional flow restrictor to produce a flow rate of the output water. Temperature sensors may be used to control the proportional flow restrictor. The proportional flow restrictor can also be controlled based on the amount of heat energy applied to the heating unit.