Is the hot water heater electric? If so, the mice may have chewed through the wires. Also, if you have a serious mouse infestation ALL your wiring is in danger, and your home may burn down from a wiring short inside a wall. This is a time to call in a professional.

You mention âÂÂflipped the breakerâ so I'm going to âÂÂassumeâ that its an electric water heater and not gas.

Just because you found a mouse nest donâÂÂt panic and assume that you have major problems.

Being you said your husband removed a panel it sounds like the water heater is in its own compartment. It should be simple enough to see where the little devils are coming in. Go to a home store have then get you the appropriate caulking and apply it yourself along with placing some rat poison in the compartment. No need to pay someone for that.
A few questions
Was the nest inside the water heater itself or just in the compartment? Was the circuit breaker tripped? Does the circuit breaker trip when reset? Did you see any damage on the wire leading into the water heater?

If the breaker wasnâÂÂt tripped and stays set and you see no damaged wires it could simply be the heating element (s) have gone bad. And not related to the mice.
Heating elements will cost you around $20 and are not all that difficult to replace. If youâÂÂre looking to save money ask friends or relatives if they had any experience replacing heating elements. Otherwise youâÂÂll need to call a pro.

Good luck to you

My husband said the breaker didn't trip, but some wires at the top have some damage. We are going to get some poison to set out where needed, and do the calking as you said.

Thank you for your thoughts and ideas.

susanp