The man allegedly set fire to the home while his partner and her seven children were inside, according to media reports.
Police earlier said the man frustrated their attempts to get into the property and that they were treating it as a "domestic-related homicide".
The unnamed man, under police guard in hospital, has been charged with three counts of murder, five counts of attempted murder and for destroying property with intent to endanger life, New South Wales state police said in a statement on Thursday.
The matter will be heard in court on Thursday and the man is expected to appear via a bedside court hearing, police said.
Emergency services were called to Lalor Park, about 35 km (20 miles) west of Sydney's city centre, around 1 a.m. on Sunday (1500 GMT, Saturday) after a fire ripped through a house.
Two boys, aged two and six, and a five-month-old girl, were killed in the fire. They are yet to be formally identified.
A 29-year-old woman and three boys, aged four, seven and 11, and a nine-year-old girl were taken to hospitals. The woman has since been released and the children remained in a stable condition.
