Mother-of-two Heather Stinton returned from picking up her daughter to find the house burnt to the ground with the family’s two cats and dog inside.

The house on Houlahan Street, where Ms Stinton lived with her partner Simon Murray and two daughters, was not insured.

Friend Mel Hutcheson said the family was in shock.

“They have lost everything,” she said.

“They didn’t have any insurance and they lost the animals as well as all the children’s Christmas presents.

“All they have is themselves and the clothes on their backs.

“They have nothing left.

“Heather left to pick up her daughter and when she came home an hour later the house was burnt.”

Fire investigators believe Christmas tree lights could have started the fire.

A Bendigo senior fire station officer confirmed the house was extensively damaged after a fire broke out in a lounge room about 1.20pm on Friday. 

"This is obviously devastating for the family who live here," he said.

"The side of the house has substantial fire damage but there is smoke and heat damage throughout the property."

Mr Stead said it took 15 minutes, 12 firefighters and three trucks to get the fire under control.  

"This is a timely reminder to turn off electrical appliances when you are not at home," he said. 

"If you have Christmas tree lights you get out only once a year and the rest of the year they are in a box, the cords can bend and become brittle.

"You should check the leads regularly to make sure they are not damaged."

Traffic was diverted from the street while firefighters fought the blaze. 

Ambulance Victoria attended to an elderly neighbour who suffered from breathing difficulties due to smoke inhalation.