Three people were rescued from the house in Sedgley, according to the fire service.
Neighbours rushed to help and brought a ladder over when the blaze broke out at a two-storey house in Beacon Lane on Saturday afternoon.
A major cordon was put in place around the scene, with an incident support unit in place and police and firefighters still there at 6pm.
The house was left gutted, with black marks visible around each of the windows on the front of the house.
The fire service shared photos showing a ladder leading to one of the first-floor windows.
A resident who lives nearby and asked to remain anonymous said: “All of a sudden I heard a load of sirens.
“I thought what is going on? And rushed out the front door and down the street and saw a load of smoke coming from a house.
“There were firefighters, ambulances and half a dozen police cars at least.
“The fire had just taken over the whole house, it was coming out the top windows.
“We were all really scared."
Another neighbour added: “I was at work when it happened, but I’ve been told it was awful and that people had to be rescued from the house.
“It’s really frightening that it was so close to home.”
Beacon Lane is cordoned off from the junction of Beacon Rise and Monument Lane and Cross Lane.
West Midlands Fire Service tweeted: "We have attended a severe house fire in Beacon lane Sedgley with the 1st fire engine arriving in 3min 38 sec.
"3 people were rescued by firefighters & then assisted by West Midlands Ambulance Service and treated at scene. We now have investigation officers from fire and West MIdlands Police in attendance."
Dudley North MP Marco Longhi wrote on Facebook: "I have been made aware of a very serious incident in Sedgley. There are ongoing investigations and my office stands ready to support in any way that may be necessary. "