CFA was called to the Back Creek Road property shortly about 10.10am on Friday.
On arrival, firefighters could see a significant amount of smoke coming from the single storey house.
It took four crews from Yackandandah, Allans Flat and Dederang about 30 minutes to control the fire.
There was significant damage to the house, with about 80 per cent affected. Three rooms were destroyed while the rest of the house was damaged by smoke.
No one was home at the time.
Operations Officer Mark Owens said the residents were lucky to have been out of the house when the fire started.
“If they were home at the time things could have been a lot worse.”
Investigations indicated the fire’s origin was in the flue area and spread through the ceiling and into the roof.
Operations Officer Owens reminded residents to check and clean chimneys and flues at least once a year.
For more information about home fire safety visit www.homefiresafety.com.au