The fire ripped through the cream and green-coloured weatherboard property at Penshurst just after 3am on Monday. Neighbours says the entire structure, which is divided into three units, on King Georges Road was engulfed by flames in minutes.

Fire fighters initially had trouble getting into the home because the entire roof had collapsed.

Bookshelves also collapsed in the rear unit, where an elderly man and woman lived, blocking access for fire crews.

Once the fire was extinguished, the couple's bodies were found in their bedroom.

Abbas Dbouk saw the flames from his window across the road and smashed down the front door of the burning house to get inside.

He said a young man came outside and an elderly man made it out of the blaze.

"The young boy he was scared," Mr Dbouk said. "He said he wanted to take his car in the driveway.

"He backed the car out but there was still two people inside.

"I tried to go inside.

"I try again and the neighbour says 'what are you doing get out'."

The two men who made it out of the house were taken to St George Hospital with smoke inhalation. 

Home owner in shock

Louie Petrovski, who owns the house, said the couple aged in their 70s had lived in the granny flat at the rear of the house for the past 30 years.

"I just can't believe it," he said, while surveying the scene on Monday.

Mr Petrovski said there were smoke detectors in the property, which he had owned since 1965.

Belsario Jaramillo lives in the two storey house next door and fled the home out of fear the fire would spread.

"I saw some smoke coming out," he said.

"I get my hose and start putting water on there.

"Then the hose was not doing nothing. I run to my wife in the room and say fire 'let's go now'."

Mr Jaramillo said he could hear the smoke alarm ringing as flames engulfed the house.

"We had to run for our lives," he said.

Fire investigators and forensic officers are examining what is left of the charred structure in an attempt to establish how the blaze began.

It is believed the fire started at the back of the property and tore through the rest of the house.

NSW Fire and Rescue Superintendent Tom Cooper said it would take investigators all day to go through the debris.

"It will have to be done like an excavation," he said.