The fire, which broke out around 5.40pm on Friday in the double storey home on the Glenelg Highway, was attended by eight units from surrounding fire brigades and a number of private units including a heavy water tanker.
Fire brigade personnel managed to save the contents of one room, but the remainder of the home was destroyed, with damage estimated at around $300,000.
Fire fighters were also kept busy extinguishing spot fires in surrounding paddocks.
The Lake Bolac and Wickliffe communities have already swung into action to help the family, who also tragically lost their oldest son last year.
A committee has been formed and is currently seeking a suitable house for the family to live in, requiring a four bedroom home with access to school buses for the Lake Bolac College.
Donations of household goods, non-perishable foods, blankets, towels and also second hand Lake Bolac College uniforms would be appreciated and can be left at 160 Montgomery Street Lake Bolac.
The five children in the family also lost all their Christmas presents, so toys would be appreciated.
The Rotary Club of Ararat has also jumped on board and will have a trailer available at Alexandra Gardens tomorrow during Australia Day celebrations to take donations of good quality items as well as cash donations.
Cash donations can also be made at the Willaura or Lake Bolac branch of the Bendigo Bank or can be mailed to PO Box 99 Lake Bolac 3351.
To offer assistance, contact Gerard Morrissey 0429 998 375, Mark Britten 0432 320 864 or David Watson on 0418 528 569.