A fuel-fired commercial water heater has a three-pass condensing type heat exchanger disposed within its tank and having a vertical flue connected at its lower end to a central collector plenum horizontally circumscribed by an outer plenum to which an exhaust pipe is coupled. A series of vertical tube structures are disposed above and intercommunicate the central and outer collector plenums. The outlet of a fuel burner is coupled to the upper end of the flue and is operative to sequentially flow combustion gases downwardly through the flue into the central collector plenum, upwardly and then downwardly through the tube structures into the outer collector plenum and then outwardly through the exhaust pipe.