Fire and Emergency New Zealand spokesman Brent Dunn said crews were called to the scene in Dublin St just after 2am.
Two appliances from Invercargill initially responded to the call. When they arrived the house was "well ablaze", he said.
Two extra crews responded from Invercargill and Kingswell and the fire was contained in about half an hour.
He said no-one was injured, but the house was "so badly damaged" that it was now deemed unsafe.
Fire investigators would be at the scene today.