Police are investigating a fire which caused extensive damage to an East Nowra house.

Fire crews and police were called to Queensborough Street at 4pm on Wednesday after locals reported seeing flames and smoke from an unoccupied house.

It took firefighters about 40 minutes to extinguish the blaze, which is believed to have broken out in the lounge room at the front of the home.

The damage bill is estimated at up to $60,000.

Police say the cause of the fire is under investigation.