Raewyn Doughty said the fire brigade arrived "incredibly fast" but police were first on the scene.
Police told surrounding residents to evacuate.
"I was backing up the drive when a policewoman said 'can you take this little one?"' Ms Doughty said.
Neighbours and relatives held a vigil while two fire units from Hastings Fire Service battled the blaze until 5am.
Shift manager Colin Littlewood said they managed to contain the fire to the garage but the house suffered heavy smoke damage. Smoke travelled through the attic and into the house, leaving a residue that would render most contents unusable.
Ms Green spent yesterday sifting through her family's burned possessions.
They were staying in the family-owned house temporarily while looking for rental accommodation close to their children's school. Everything they owned was in the garage.
"We had just moved in our last load of furniture," she said.
Their car, parked 2m from the garage, was also destroyed.
"We went to jump in and move it but the keys were in the fire. We just got the vehicle two weeks ago. Now it has gone."
They would stay "crammed in" with family in Fernhill until they found rental accommodation. The children went trout fishing with their father yesterday "to take their mind off things".
Ms Green's mother-in-law, Bonice Ropiha, said the family had also lost a new washing machine, delivered the previous day. "Everything they had in their life, including the car, has gone," she said.
Ms Ropiha's partner had recently died and his possessions were also lost to the fire. "I was going to burn his things anyway, but at a special time."
Ms Doughty said the intensity of the blaze had scared her. The fire could have easily spread to their house thanks to flammable eucalyptus trees on the boundary.
"It's just very scary being in a back section with so many other neighbours. Had there been a wind we would have been in trouble, or somebody would have been."
Mr Littlewood said it was very lucky nobody was harmed. He said an investigation was under way but a candle was the likely cause. "It's a reminder that if you have candles you should have proper containers for them and keep them away from things like flammable curtains."
Ms Green said while it was a sad time, they were very lucky nobody was hurt. "We should be counting our blessings."