San Jose fire Capt. Chuck Rangel said the fire on Purple Cliff Court was reported at 3:42 a.m. by residents who were awakened by their barking dog and saw smoke and fire coming from their neighbor's garage.
The woman who owns the house was visiting family members in Salinas, Rangel said.
He said firefighters were able to knock down the blaze by 4:17 a.m. and prevent it from spreading to the woman's house.
The woman rushed to the scene and "was very pleased that there was no damage to her home," Rangel said.
She shed tears of relief and exclaimed, "Thank God - now we'll have a merry Christmas!" he said.
The fire damaged the electrical panel for the garage and house, so the woman's gas and electricity were shut off, Rangel said.
The cause of the blaze is still under investigation.
The fire caused heavy damage to the garage and also caused some smoke damage to the first floor of the house, Rangel said.