The attack happened at about 2:00 pm (1300 GMT) yesterday in Huyum, in the Askira-Uba district of Borno state which locals say has been hit repeatedly in recent weeks by the Islamist militants.
"The whole village was burnt by Boko Haram gunmen. We lost around 500 homes," said Bukar Zira, who fled to the commercial hub of Mubi in neighbouring Adamawa state as the rebels moved in.
Zira said the insurgents surrounded the village and opened fire before moving in, sprinkling petrol on homes, many of which are mud-brick with straw roofs, then setting them alight.
Another resident, Peter Malgwui, said Boko Haram had mounted several raids against neighbouring villages in recent weeks, looting food supplies and homes.
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"They completely burnt the whole village. Not a single home has been spared," he added, giving the same death toll as Zira.
The attack is the 12th since Muhammadu Buhari became Nigeria's new president on May 29. A total of 109 people have been killed, according to AFP reporting.
Buhari, a former military ruler and retired army general, has made crushing Boko Haram a priority for his administration after six years of violence and at least 15,000 deaths.
One Huyum resident, Ishaya Ayuba, said: "The attackers remained up to 4:00 am this morning until they withdrew.
"There were troops stationed about 20 kilometres (13 miles) away but they didn't respond. We have lost everything.