Father of one Stephen Maurice, 32, removed a flywire screen and climbed through the front bedroom window of the girl's Sunshine house on October 15, 2007, the Victorian County Court heard on Thursday.
Even though the family has moved, the girl is still so scared she sleeps either with her parents or her father camps on her floor.
The victim, who had turned 10 two weeks earlier, woke about 4am to find a hand rubbing her legs, stomach, bottom and vagina.
Maurice, who lived 50 metres from the victim's home, had climbed the ladder to the top bunk and assaulted the victim while her older sister slept in the bunk below.
Judge Paul Lacava said the incident was "about as serious as it gets" and was "every parent's worst nightmare".
In her statement, the victim said she remembered going to bed and waking up about 4am when she felt a hand in her bed.
"I woke up and someone was rubbing me, touching parts of my body."
The victim said she heard footsteps on the bunk ladder and saw a figure climbing higher to reach her.
"He kept forcing my legs apart," she said.
After Maurice left, the girl screamed her sister's name and the pair went to wake their parents.
The father initially thought his daughter had just had a bad dream, until he discovered the removed flywire screen the next morning.
Maurice, who has a five-year-old daughter from a previous relationship, was arrested five months later after his fingerprints were matched to those on the window.
He has pleaded guilty to one count of aggravated burglary and one count of sexual penetration of a child under 16.
Crown Prosecutor Michele (Michele) Williams, SC, said had the attack happened two weeks earlier when the girl was nine, Maurice would be facing a maximum prison term of 25 years.
Sexual penetration of a girl between 10 and 16 carries a maximum of 10 years.
Ms Williams urged Judge Lacava to impose a sentence near the maximum, adding the attack was premeditated.
"It has occurred in a child's bedroom where a child and her family ought to feel that child is safe," she told the pre-sentence hearing on Thursday.
The court heard Maurice told a psychologist he had seen a 17- to 20-year-old woman or girl at the house, and planned his attack.
In a victim impact statement read to the court, the victim's father said the incident had shaken his world to the core.
He said his daughter's trust, confidence and childhood innocence had been destroyed.
The family had moved but he would sleep on a mattress on the girls' bedroom floor, or his daughter would sleep in her parents' bed, because of her fear, he said.
"I'm no longer the family protector and I see the questioning in my children's eyes every night when I tuck them into bed," he said.
"Knowing he lived only metres from our house makes it worse."
Maurice's lawyer Leighton Gwynn urged the judge to consider a more lenient sentence, as his client had pleaded guilty, shown remorse and had no prior convictions.
Judge Lacava will sentence Maurice in the next week, AAP reports.