The fire was reported just before 9:00 a.m. Wednesday at 5 Bozarthtown Road in Tabernacle.
Brothers Douglas and Matt Deal live several doors away from the home.
"We just woke up and saw smoke and, before you knew it, the house was gone," Matt Deal said.
"It's terrible they lost everything and they're good people, the best people we know," Douglas Deal said.
Tabernacle Fire Chief Dave Smith tells Action News there was heavy smoke and fire upon arrival.
By mid-morning the fire was out, Christmas decorations lay burnt and singed, but the nativity scene only feet from the fire was untouched.
One firefighter received stitches after cutting his finger on glass.
The family was away at the time, but arrived to the scene in time to see firefighters battle the flames.
The home is a total loss. There is no word yet on a cause or where it began.
The fire marshal is investigating.
Smith said he was proud of the firefighters who came out to help get the fire under control on Christmas Day.
"All these people are volunteers and they leave their families to come do this. It's just in Tabernacle we all stick together, we have a great group of people. We have over 50 volunteers, something to be proud of," Smith said.
