Is a relay with a 20 amp rating enough to handle the current from a residential hot water heater?
Probably it will, but it may not last for long, because it is close to maximum relay current. 

Here are some suggestions:


Use higher current relay. It will prolong the life of the relay. (30A, 40A or even 50A)
Make your own PCB with wider tracks for AC.
Use optocoupler instead of a single transistor. It will isolate your controller from the AC.
Add snubber to your PCB.
Read this question, asked by me, provides a lot of information about switching AC loads.