When you say water heater, do you mean a boiler? What is the energy source, gas or propane or electricity or something else? Do you have information on that boiler (manufacturer and model)?

Is your system for heat delivery to the house hydronic (radiators)?

There's not enough information to say something specific about your setup. But I can compare to my own - the boiler has a separate and direct connection to the household hot water tank, and will fire to provide household hot water separate from the radiators. The desired temperature for household hot water is also set separately. Your boiler control may also provide ability to heat household water for specific times of the day (for example to make sure that there is hot water in the morning).