The single-storey dwelling on Hoskins Street was well alight when fire crews arrived around 8.30am.

Melanie Joannau sat on the front nature strip, sobbing and barefoot, wrapped in a blanket and cradling her eight-month-old son in her arms.

Fire crews believe the blaze started in a shed attached to the back of the home.

"We were getting ready for school. I thought the little fella was kicking the back wall, it sounded like someone kicking the wall. Then my partner ran out, and the whole shed was on fire," Ms Joannau told the Mercury, holding sons Chase and Ford.

Four fire engines, two Hazmat crews, several police vehicles and an ambulance converged on the street, blocking it in both directions due to an asbestos risk from the fibro home.

Fire Rescue NSW Inspector Jeremy Hood said the rear of the building had sustained most of the damage.

"A house this age, we assume asbestos inside," Insp Hood said.

"The back of the premises is badly destroyed."

The back shed appeared blackened and burnt, with the gutters of the house also scorched.

Hoskins St backs on to the grounds of Kemblawarra Public School however inspector Hood said there was no risk to students.

A groundskeeper working on the oval behind the house said he saw "a lot of black smoke, like petrol burning."

"We're just shocked. I didn't have a chance to grab anything, only my bag," Ms Joannau said.

"We cant go back in. I don't know what we’re going to do."

Ms Joannau, her sons and her partner were all treated for smoke inhalation.

Insp Hood said fire crews had not yet uncovered the cause of the blaze.