A heat pump system provides at least six modes of heating, cooling, and/or domestic water heating operation, where domestic water heating may occur concurrently with heating or cooling a space in a structure. The heat pump system comprises a desuperheater positioned downstream of the compressor and operable as a desuperheater, a condenser or an evaporator, a source heat exchanger operable as either a condenser or an evaporator, a load heat exchanger operable as either a condenser or an evaporator, a reversing valve positioned downstream of the desuperheater heat exchanger and configured to alternately direct refrigerant flow from the desuperheater heat exchanger to one of the load heat exchanger and the source heat exchanger and to alternately return refrigerant flow from the other of the load heat exchanger and the source heat exchanger to the compressor, and an expansion valve positioned between the load heat exchanger and the source heat exchanger.