Fire crews were called to an Allen Rd property about 11.50pm on Sunday.
Fire Service central-lakes assistant area commander Hamish Smith said fire trucks from Rotorua, Taupo and Lake Okareka found the house and adjoining carport "totally destroyed by fire".
One of the home's five occupants suffered serious burns and was taken to Rotorua Hospital by helicopter, before being transferred to Waikato Hospital, where he remained last night.
Mr Smith said it was fortunate the family had working smoke alarms, which woke them.
"It most definitely could have had a different outcome if there were no working smoke alarms. The smoke alarms definitely did what they're designed to do, alarm the occupants so they can get to safety. They save lives," he said.
Fire crews did what they could to contain the fire, but most of the damage had already been done: "We extinguished what was left burning, but it was pretty much iron and ash on the ground."
The family's home, carport, two cars, caravans and boat had been destroyed.
"I think it's quite a substantial loss for the family. They would have lost a lot of memories and irreplaceable things in that fire, though it's good that they still have each other."
A fire-safety investigator was investigating how and where the blaze started. However, it was fair to rule out any suspicious circumstances, Mr Smith said.
More than 20 firefighters, five Fire Service trucks and two fire investigators had attended the scene.