Authorities say the deadly blaze probably started on the living room floor of the central west NSW property, rather than in the roof of the house.
The man - named locally as Paul Read, and believed to be in his 50s - was found dead inside the Peak Hill home at about 12.30pm (AEST) on Thursday along with his two-year-old grandson.
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Greg Combet, the federal minister assisting the climate change and energy efficiency minister, has confirmed batts had been installed at the Derribong Street property under the federal government's home insulation program.
Investigation under way
The scheme has proved controversial, having been linked to numerous house fires amid allegations of dodgy installation.
But initial police investigations into the Peak Hill blaze suggest insulation batts were not to blame for the fire.
"At this stage in the investigation, preliminary evidence indicates the fire most probably began on the floor of the lounge room," NSW Police said.
Crime scene investigators are expected to remain at the scene for several days.
Police have not yet confirmed the identity of the pair killed in the fire.
