Instant water heater supply filter
Your heater doesn't have a recommended limit on hard water, but I've seen others ranging from saying 7 to 12 gpg (grains per gallon) max. You need to find the hardness of your water before doing anything. 

You can purchase hardness test strips, which are the easiest way to figure this out.



Water Hardness Scale

Grains Per Gallon   Milligrams Per Liter (mg/L)    Classification
                    or Parts Per Million (ppm)   
-----------------   ----------------------------   -------------------
less than 1.0       less than 17.1                 Soft
1.0 - 3.5           17.1 - 60                      Slightly Hard
3.5 - 7.0           60 - 120                       Moderately Hard
7.0 - 10.5          120 - 180                      Hard
over 10.5           over 180                       Very Hard


Treatment

Hard water is mainly caused by calcium and magnesium carbonates.

The most common way to treat it is with a softener, where "hardness ions" are exchanged for sodium ions in an ion-exchange resin. Essentially, the hardness is swapped with salt.



Cleaning

Your manufacturer should also have some cleaning instructions, where you periodically clean the heater elements. This is probably every 1-5 years depending on water quality.