Cr Smith and his two brothers bought the weatherboard house at McColl Lane more than 20 years ago.

The tenant of 20 years returned home from Ballarat's Trash and Trivia Market to find it burnt to the ground.

The fire started at 8.45am and took firefighters 38 minutes to bring under control.

Fire brigade units from Creswick, Daylesford and Newlyn/Dean attended the fire.

The fire started in the lounge room from an electrical appliance. Fire investigators could not determine what kind of electrical appliance caused the fire because of the extent of the damage.

Speaking to The Advocate on Monday, Cr Smith said the tenant was "quite shocked" to find the house gone.

Cr Smith and his wife Rhonda were helping the man and had taken him shopping.

"It's the biggest loss I have ever seen in my years in the CFA," Cr Smith said.

"It was burnt from top to bottom."

On receiving the information about the fire on his pager, Cr Smith knew it wasn't good.

He said he knew it was a structural fire and thought it may have been a shed.

Cr Smith spent all day Sunday cleaning up the property.

He said he was "weighing up the options" on what to do with the property.