No one was injured in the fire reported at 9:04 p.m. at 36 Third Ave. N.E.
Police arrested Sarah Diane Smith, 28, on the arson charge about 20 minutes after the fire was reported at the house she was renting.
Bond was set at $50,000.
Police charged Smith with intentionally starting clothing on fire in the bath tub on the main floor of the house while others were in the home, according to a press release.
An investigation indicated the fire's origin was in the bathroom of the home, according to David Schipper, Le Mars Fire-Rescue chief.
Smith and four other family members were in the home when the fire started, Schipper said.
They included two of Smith's children, who are under the age of 6, and two adults.
They were watching a movie when one of the adults saw smoke coming from the bathroom, the fire chief reported.
Smith had left the home.
She was found by police about a block away from the fire at Cargo-Express, 327 Plymouth St. N.E., according to Stuart Dekkenga, Le Mars Police chief.
Smith was taken to jail after her arrest.
Firefighters were on the fire call for more than 2 1/2 hours.
When they arrived at the fire scene, firefighters saw heavy smoke from the roof and the south side of the 1 1/2 story house, according to the fire report.
Flames were also visible in a south side main floor window, Schipper reported.
"Firefighters made a quick exterior attack through the main south side window and then crews went into the house and extinguished the fire in the bathroom," Schipper said.
Damage to the house owned by Mike Feller, of Le Mars, was estimated at $10,000, he said.
Le Mars Fire-Rescue was also assisted by Le Mars Ambulance, MidAmerican Energy and the American Red Cross.