Water Heater blowing out Power to Entire House
 

So recently my entire house lost power, I took a trip down to my fuse box to see if anything had tripped but saw no indicators and trying to reset the power from the main breaker on the box did me no good. I went outside the the breaker connecting us to the grid and flipped that one and our power returned only to go out in the next minute or so.

I have since located the problem, when flipped the fuse for our water heater (to be turned off) and then reset the power to the house we had no more problems and outages. So the problem is with the Water Heater, thing is the water heater has never had this problem before and is fairly new, (not exceptionally new but was purchased in 2004 and should still be working fine) so I don't believe the problem is with the water heater itself (though I could be sorely mistaken as I've never had to deal with a water heater malfunction before) My questions are as such:

1. Do you think my best option would be to first replace the fuse/circuit in my circuit breaker? (I thought if this was the problem though only that fuse would be going out not the power to the main house)

note: The water heater is connected to its own separate fuse/circuit as I am sure it is in most peoples houses.

2. Could the problem be with the water heater itself?

3. Is there another way to fix the problem, perhaps lowing the power input that the water heating is using? (only way I can think to do this would be lowering the temperature to which it is heating the water) any other ideas are welcome.

So something caused your main breaker to trip at the service entrance? What is that breaker rated at?

My thinking is to say something more complicated than you can deal with is going on and that you should call for professional help.

Does everything else work normally when the water heater breaker is switched off?

Yes it is possible for an electric water heater to develop a short circuit in a manner that trips the breaker. You will still want to verify that it is the water heater and not the circuit wiring; that is done by unhooking the two power wires right where they go into the water heater.

With the power wires unhooked from the water heater, if you get continuity (use an ohmmeter) between the body of the heater and either wire end going into the heater then you definitely have a problem of some kind.

A correctly wired home size all electric water heater always has its own pair of breakers or two fuses in the 30 to 40 ampere range.

I don't know what part of the main connector tells me the rating, any extra clarification here may help, I have an older house and therefore most of the electrical is older (while appliances may be newer)

Yes everything else works normally with that breaker off, it seems to run ok for about 20-30 minutes if I turn the breaker connected to the water heater on at which point it shorts the house out and I have to go back outside to fix it.

Does this indicate a problem with the wire? The electrical within the heater? Could the problem be generated from the box itself?

It tells you there is a problem with the water heater and that the main breaker is more sensitive than the WH breaker. Fix or replace the WH and all should be OK.
I would suspect a dead short in the one of the elements... as soon as the heater switches elements, there is a huge amp draw causing the main to trip because it is a little more sensitive than the WH breaker.

Since the WH breaker isn't tripping, then is it the WH? Maybe the total load on your service is too high and the water heater is just the final straw.