As you enter the village for the second time you’ll talk to the merchant at the Duke’s Emporium. He tells you to search a house with a red chimney on the western side of the village. This is part of the main story.
How to find the house with the red chimney in Resident Evil Village
Use the Winged Key to exit the Altar and then shoot the next lock to reach the Maiden of War.
From Maiden of War’s square, enter into the house through the open gate and stairs. Go to the backyard by unlocking the back door.
Now enter another house on the right and exit it by moving the shelf.
Village Workshop Safe Code
Take left from the blue tractor and enter the workshop area, gate with the sign “DO NOT ENTER”. Unlock the safe using code 070408. Inside the locker are a jack handle and an M1911 pistol.
Return back to the blue tractor through the same path and use a jack handle to lift the tractor. Crawl under the tractor to reach the other side.
Continue your journey down that alleyway and then take a left. You will find an iron gate that accepts the Iron Insignia key
Climb the ladder to reach the rooftop and jump down next to the house with the red chimney.
Use the ladder to enter the house with a red chimney.