Twenty-two firefighters tackled the blaze at the property in Vidlin after the alarm was raised at about 8.40pm.
The managed to extinguish the fire overnight.
Appliances from Brae, Bixter, Scalloway, Lerwick and Hillswick was sent to the scene.
Firefighters used three main jets and two hose reel jets to extinguish the fire overnight.
Due to the wooden structure of the house and the adjoining garage and extremely high winds, which fanned the flames, both structures were destroyed.
Incident Commander, Group Manager Derek Wilkie, said: “The Brae crew were first on scene and when they arrived they were met with a well-developed fire in the garage area which adjoined the house.
“Both structures were of timber construction and the fire condition was exacerbated by the high winds. These factors made it an extremely challenging job for the crews, but they tackled the fire in their usual professional manner.”
He added: “We also had to cool some gas cylinders which were in the vicinity of the fire. We fought the fire in sectors and used a thermal imaging camera. Around 22 fire personnel were involved in the incident.”
Acting Chief Inspector Paul Daley, of Police Scotland, added: “Despite being a substantial blaze, fortunately the three occupants of the property managed to escape without injury.
“Officers remain in attendance to protect the scene. Working in conjunction with Scottish Fire and Rescue Service will allow for a full investigation to take place to determine the cause of the fire, but there does not appear to be any suspicious circumstances at this time.”