Te Aroha fire chief Roger Clark said the three children were in bed asleep in the adjoining house while the parents were getting ready for bed when they smelt smoke.
They managed to wake their children, all aged under 5, and get them outside before one of the adults tried to extinguish the fire as they waited for the Te Aroha Fire Brigade to arrive.
Neither the house or garage were fitted with smoke alarms, he said.
Although their efforts at dampening the fire helped limit damage to the garage, Mr Clark said they didn't recommend that occupants tackle a fire, preferring them to get out and stay out.
"We don't recommend that people try and put a fire out, bit of instinct that one."
Fortunately the garage only suffered damage to about 10 per cent of the double garage, while firefighters helped rid the house of its smoke smell.
"There was just a bit of smoke in the house. We put our fan in there help. Mum and Dad were probably the ones trying to put the fire out. They were the ones that had suffered more smoke inhalation."
Northern fire communications shift manager Jaron Phillips said it appeared there had been an electrical fault but a fire safety officer was heading to the scene to confirm how the fire started.
Meanwhile in Paeroa this morning, a 9m long house bus parked on Miller Ave caught fire about 6.35am today.
Mr Phillips said the occupants again managed to contain the small fire until the local brigade arrived shortly afterwards.
A fire investigator is also examining the scene.
