Rep. Charles C. Diggs (D-Mich.), recently convicted of mail fraud and illegally using the salaries of his congressional aides to pay his personal and congressional bills, has sold his Capitol Hill home to an Ohio congressman for $235,000.

Diggs, 55, purchased the 98-year-old, two-story brick row house at 322 Second St. SE se eight years ago for $70,000.He sold it Oct. 26, two weeks after his conviction in U.S. District Court here, to Rep. Willis D. Gradison Jr. (R-Ohio).

Diggs refused to comment yesterday on the sale. Asked where Diggs, chairman of the House District Committee, would now live, a spokesman said only that the congressman is still a District resident.

During last month's trial, witnesses testified that Diggs encountered increased financial difficulty and used kickbacks from salaries of his staff members to pay both personal and congressional obligations. At the same time, witnesses said, income from his family's funeral home business in Detroit was declining. Diggs' congressional salary is $57,000.

The Capitol Hill home, the first Gradison has bought since coming to Washington in 1975, is 2 1/2 blocks from his office in the Longworth House Office Building. Gradison was out of town and could not reached for comment yesterday.

"He just decided he needed a home, a place where he could entertain," said Gradison's administrative assistant, Ronald Roberts. The divorced congressman has been living in a two bedroom apartment at 630 G St. SE, Roberts said.

"He didn't even know it was Diggs' house until the settlement," Roberts said.

Gradison paid $59,000 down on the house and obtained a 30-year $176,000 mortgage from Equitable Savings and Loan Company according to Lusk's real estate service.