The blaze, which caused an estimated $1.7 million in damage, was reported at 3:21 a.m. at the Kappa Sigma fraternity house at 168 S. 11th Street.
San Jose fire Capt. Mary Gutierrez said the occupants were sleeping and were awakened by smoke alarms.
"Considering the severity, it was probably burning for a period of time before it woke them up," Gutierrez said.
Everyone managed to escape safely, and firefighters entered the home and battled the blaze from inside for about 45 minutes, she said. When it began to look like the building might collapse, they moved outside and fought the fire defensively.
The blaze was ccontrolled at about 6:10 a.m. One firefighter suffered second-degree burns to his hands and was taken to a hospital, but has since been released.
The second floor was badly burned and there was severe water damage to the first floor, she said.
"It's a complete loss," Gutierrez said.
Crews are working this morning to salvage the residents' belongings.
"Firefighters are on the first floor pulling out some of the pictures and bringing them to the fraternity students," she said.
The American Red Cross has been called to the scene to assist the 28 people who were displaced. Gutierrez said there was a summer session under way at the university.
She said it appears the fraternity house is owned by university alumni.
Firefighters from the city of Santa Clara and Santa Clara County manned San Jose fire stations as firefighters battled the blaze.
The cause of the fire remains under investigation, but Gutierrez said it is possible the blaze started in the laundry room.