Lavington's Harmony Franz is hoping to raise $5000 through an online gofundme fundraiser to help her cousin Emma Grentell, her partner Ben Grimmer and their two young children, aged five and three.

"They're a loving family that would do anything for their kids," she said.

"They've lost everything so we hope [the fundraiser] will help them get back on their feet."

Miss Franz said she was woken by the sound of the fire on Saturday morning, but had no idea it was her family involved.

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"It's devastating," she said.

"From where I can live I could see flames and hear sirens, I didn't realise it was their place."

Emergency services were called to the Dale Crescent, Lavington home, at 3.40am.

Neighbours directly next to burning house were evacuated, with one neighbour saying they woke up to the sound of fire engine's radio and found a crowd gathered in the street.

"I got woken up by the truck radio, I came out and you could see the flames out the back of the house," one neighbour told The Border Mail.

"It was well alight, the damage was done.

"The whole house is gutted, they'll have to just pull it down."

The neighbour said a family with two young children, a boy and a girl, had been living in the home for about six months.

"The smoke alarm woke the family up, it saved them and they got out," they said.

"We're going to check ours now."

Albury Civic Fire Station captain John Vandeven said emergency services were called to the fire about 3.40am on Saturday morning, but the house was "fully involved" when they arrived and could not be saved.

Crews stayed on the scene until about 6.30am.

Mr Vandeven said the incident offered a timely warning about the need for working smoke alarms.

"Without that, the consequences might have been completely different," he said.

"The house is destroyed, they won't be able to occupy it, it will have to be rebuilt."

Initial police investigations suggest the fire was not suspicious.

To donate visit https://www.gofundme.com/ben-and-emma