The 50-year-old, arrested in dramatic circumstances on board a train on Wednesday evening, is accused of the domestic violence murder of an elderly relative.
The body of the 80-year-old former pastor and music teacher was recovered by emergency services after the blaze at Croydon in Sydney's inner west about 4am on Wednesday.
Police on Thursday alleged the younger man set the home alight and robbed a service station shortly after, threatening staff with a machete and demanding cigarettes.
A 15-hour manhunt ended on board a NSW Central Coast train, with the machete allegedly found down the man's pants.
He is due to face court at Gosford on Thursday morning.
An elderly woman, who left the home about three hours before the fire, has been assisting police.
All three people are believed to be related.
"It's just such an awful set of circumstances," NSW Police Superintendent Christine McDonald told reporters on Thursday.
Community members were mourning the 80-year-old man.
"He was such a beautiful person, a great community man," Supt McDonald said.
"My thoughts go out to not only the immediate family, but the wider community, because I know from the text messages that I've received that this has had a rippling effect throughout our entire community."
The man has been charged with murder, a domestic violence-related charge of destroy or damage property with intent to endanger life, and armed robbery.
An accelerant was allegedly used to start the fire.
The man was allegedly carrying a machete in his pants but co-operated with police when he was arrested on board a train.
"I am very acutely aware that this could have been a lot worse, and him in possession of a machete terrifies me to think what he could have done if we had not intercepted him in Woy Woy last night," Supt McDonald said.
Six trucks and almost two dozen firefighters responded to the Wednesday morning fire, entering the back of the property due to the "intense" flames at the front of the single-story, red-brick house.
Part of the roof collapsed as firefighters were inside, forcing them to retreat, Fire and Rescue NSW said.
Footage taken after the blaze was extinguished shows a large portion of the roof caved in and firefighters examining other parts of the Irrara Street home.
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