You're right to say no. If she's desperate, how has she got in this position, and what will turn things around so that she can repay any loan, or not default on the rent.
Be sympathetic and help her in ways that don't involve money, but this has disaster written all over it for you.
Why does she think you can afford to help her? I would just say "please stop asking, I'm really sorry you're in such a difficult situation, but we're not in a position to help". Don't give specifics like you're saving up for a house, she may either ask to borrow your savings knowing you have them, or try and talk you round. Just stuck record of no.
Things you could do to help:
- get her to make an appointment with CAB or other specialist debt organisation who can go through her finances and advise properly how to sort herself out
- invite her round for dinner regularly so she has a meal and a sympathetic shoulder
- ask her if she wants any help to do practical things, such as go through the house and put unwanted goods on ebay or local selling sites to raise some money
Does she have a job, a partner, children?
It's tempting to want to help a good friend, but a quick google on here will show you how badly that often ends up. I've never seen a post or a reply along the lines of "I lent my friend enough for a deposit and she paid it back the next month".
There's also the horrible situation it puts you in - if she owes you money and is posting about new purchases/going out for a meal/having her hair done - you'll be thinking that if she has the money to do those things why isn't she paying you back more quickly?
DON'T DO IT!!!!