The fire broke out just before 1 p.m. in the 1600 block of Grand Avenue.
"I heard like a big loud bang, boom, I thought it was thunder," said Frances Morones, who was in the lower unit of the home with her family when the explosion happened.
She said she grabbed her 8-year-old granddaughter and ran.
"The neighbor across the street gave me this jacket, we didn't grab nothing," she said. "I told her we didn't have time because I saw the walls bending like they were gonna fall in."
Racine Fire Capt. Craig Ford says the explosion came from a gas tank on a car that was being repaired by a 50-year-old man and his two sons, who live in the upper unit.
Because of the rain, they took the tank inside but one of them slipped, causing fuel to spill out.
"The occupants described within 15 seconds, they had a big boom and a fire," said Ford.
Ford says all three floors caught fire and burned away the stairs to the second floor, trapping the two younger men and a 3-year-old girl.
A neighbor ran over and put a ladder up to the second floor porch and the two adult sons and 3-year-old girl were able to escape. The grandfather was sent to the hospital for treatment of non-critical burn injuries.
"Without the help of the neighbor to the west, those guys are stranded here with fire behind them in the house, holding a 3-year-old girl and deciding whether they should jump 12 or 15 feet," said Ford.