The residents - a man and woman aged in their late 60s - had their 10-year-old granddaughter at their house at Meredith Street just after 8pm on Sunday when the fire started at the back of the property.

The trio and their two dogs managed to get outside, as neighbours trained garden hoses on the rapidly growing inferno, which ended up destroying the house.

Speaking on behalf of the family on Monday morning, the couple's eldest son Matt told the Newcastle Herald the property had been the family home for 45 years and had "lots of memories".

He said his father went back into the building after escaping, in an effort to put out the blaze.

The man only suffered minor cuts and bruises - he was checked at John Hunter Hospital and was out by Monday morning.

Mark O'Toole, a nearby resident, was the one who pulled him from the burning home.

Mr O'Toole told the Newcastle Herald he happened to be taking an evening stroll when he saw the fire and rushed to help the neighbours who were already trying to stop the blaze.

"I jumped the back fence and ran into the back yard of the house that was on fire to grab another hose," he said.

"I followed the hose upstairs and inside the house. He was in the hallway with just a wall of fire in front of him. The upstairs room was ablaze at that point and the smoke at that stage was already halfway towards the floor.

"I dived straight back outside to get some clear air - I just said 'mate, we've got to go'. I didn't see what it was, but he tried to grab one of the pictures hanging on the wall.

"[The house] was a lost cause."

They got outside as the heat generated by the fire pushed them further backwards. Fire and Rescue NSW crews were on scene soon after.

It took teams from five fire stations until just before midnight to put out the blaze - but they could not save the home.

Investigators had not determined what started the fire as of Monday morning, but the Newcastle Herald understands they are looking into whether an electrical fault was the cause.

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