In 1975, skeptics told Ola Davis to give up her dream of buying a house for $1 under the District of Columbia Urban Homesteading Program.

"It's a joke!" "Don't believe it." "I never heard of it," "Davis said friends and relatives told her. Until she saw a television commercial about the program, which is funded with community development block grants, Davis said she'd never heard of it either. Undaunted, she has a 20-year, $20,000 rehabilitation loan, and in September 1976, less than a year after spotting the house, Ola Davis and her teen-age son Thomas moved into their home-a newly renovated, two-story, two-bedroom, yellowbrick townhouse within walking distance of the U.S. Capitol and across the street from Dunbar High School.

"I've been excited ever since," said Davis, who has enjoyed having the last laugh on her skeptical friends and relatives. "My father-in-law, a preacher, made the remark, "You'll never get the loan.' But I did!"

Now her house is valued at more than his house, she said.

"When we went to settlement, my house note was $179 (a month).I cried. I couldn't believe it knowing the cost of apartments and what my father-in-law paid for his house."

Her monthly payments are now $228 with increased taxes, she said. But her property, and the block on Kirby Street, are booming. A neighbor on one side of her, an attorney, bought his house a year ago for more than $46,000, she said. The neighbor on the other side recently paid more than $71,000 for his house.

Just a few months before, the buildings were vacant, and the police on the beat-who frequently came by to check on her and Thomas, 15-were her closest neighbors, said Davis.

Now she is secretary of the street block association, and she has been helping other Shaw families apply to the program.

"I have no regrets about this house watsoever," she said.

Prior to applying to the program, Davis said she lived with her in-laws. Though she dreamed of buying a house, she found most of them unaffordale.

"As a divorced woman, I never thought I would be a homeowner. But I heard about the program and it works."

After her application to the program was accepted, Davis said city Department of Housing and Community Development of Housing and Community Development officials took the homesteaders to look at houses.

"They were horrible," Davis recalled. The house she eventually selected was a crumbling, tomoato-red brick shell ravaged by vagrants who lived there during the years it was vacant.

During the tour, she said she noticed a tarnished nickel on the floor of the dining room. "I turned it over. It said, 'In god we trust.' I said, 'Praise the Lord! This is going to be our home.'"

Four people bid on the house. Davis' name was drawn out of a hat. Later, during the renovation Thomas threw the nickel into one of the ceilings for good luck.

Davis said housing department officials were invaluable in helping her obtain loans quickly and find contractors, architects, discount house materials and whatever else she needed to have the renovation completed within a year.

The program also sponsored house maintenance workshops that she and Thomas attended at Phelps Vocational School.

"Plastering, laying bricks, we did it all. I plan to brick my walk myself," said Davis.

Barbara Carter, director of the homesteading program, said 19 persons have moved into their renovated homes since the program began in 1974. Twenty-six others are awaiting renovations and 24 new homesteaders will be selected within the next two weeks.

Carter said about 3,000 people have applied for the program over the past four years. However, most were ineligible for the program because they made too much money or too little, or because their families were too large for the houses available. CAPTION: Illustration, no caption, By William T. Coutler for The washington Post; Picture, The Urban Homesteading Program, Funded with Community Development Block Grants, helped Ola Davis buy a home for $1 and get @ $20,000 rehabilitation loan. By CraigHerndon-The Washington Post