When Mika Sadai listed a four-bedroom Mount Pleasant home for sale with the Colquitt-Carruthers real estate firm last week, she added a special twist to the deal: Sadai offered to finance the mortgage loan herself for one year at 12 percent interest -- several points below market rate.

"I'm doing it because I realize what's happening in the market now," said Sadai, a real estate investor. "Sellers know this is almost the only way to sell a house these days. People are so scared to buy."

The reason for that buyer fright is plain: this week mortgage interest rates at at least one lending institution soared to 17 percent. At the same time more and more local savings and loan associations and other conventional lenders are closing their doors to new business because of a lack of lending money.

As a result, say real estate agents, more and more sellers are being forced to do the same thing as Sadai to lure the reluctant buyer into a contract.

As recently as last week, according to Bob Moulthrop, a senior vice president of Colquitt-Carruthers, slightly more than one half of all home sales in Northern Virginia involved owner financing or other types of special creative arrangements that required no new loan money. That is about three times the normal amount of such financing, he said.

"I feel for the seller," Moulthrop said. "Many of them have to sell."

At the crux is the simple arithmetic behind the climb in interest rate. A typical $100,000, 30-year mortgage at 17 percent interest requires a monthly principal and interest payment of about $1,426. At 14 percent interest -- and local realtors report current rates ranging from just under 14 percent to 17 percent -- the same $100,000 mortgage costs about $241 less each month.

Further complicating the situation is the rapidly changing nature of mortgage interest rates. Many buyers who recently signed contracts to buy houses and expected to quality marginally at what was then the prevailing interest rate are now finding that, because of the higher rates in effect at the time of closing, they cannot quality.

The availability of alternative financing has become a strong selling point, leading one seller to point out in yesterday morning's classified ads that his Capitol Hill house has an assumable mortgage at 9 1/2 percent interest even before beginning to decribe the size of the house or that it is close to the subway, for instance.

Owner financing works well when a seller has nearly paid off the mortgage on his home or when he is in no hurry for immediate funds. William Ellis, vice president of the Shannon & Luchs real estate firm, noted that many people have so much equity in their homes they can hold the mortgage and still get enough to get themselves another house." Such financing arrangements have been gaining in popularity with agents and sellers since last last summer, Ellis added.

Real estate investor Sadai said she hopes to sell her home soon because most people think interest rates may go down later this year or next year. Under her deal, a buyer can make a $25,000 down payment, assume the $20,000 FHA mortgage on the house, and then get 12 percent financing from Sadai from up to a year until more reasonable conventional financing is available. Sadai estimated that the interest-only, monthly payment during that year would be about $750.

In addition to owner financing, one Bethesda real estate agent said she has noticed that some of her clients are trying to get mortgage funds through loans from their family businesses.

Indicators of local housing activity have pointed recently to fewer people applying for home mortgages, in addition to a severe slowdown in homes sold compared to the boom years of the mid- to late-1970s in some areas, and fewer new homes being constructed.

Locally and nationally, savings and loan associations have been plagued with withdrawals. That, coupled with the high interest rates lenders themselves must pay for their money, spells trouble for many local savings institutions.

At Interstate Federal Savings and Loan in the District, president Robert A Barton Jr. said his firm has had no money to make new mortgage loans for several weeks and has been able to fulfill only longstanding commitments to builders for their projects.

"It's been a disaster," Barton said. "It's killing the housing business, and there's no easy answer."

Richard Landry, director of economic policy for the U.S. Chamber of Commerce, said it appears that consumers are trying to maintain their standard of living in the face of double-digit inflation by going more heavy into debt.

"We forsee a progressive squeeze on the typical household," he said, a situation that bodes ill for selling homes.

Tom Parliment, an economist for the U.S. League of Savings Associations, said yesterday that possibly as many as 40 percent of the nation's home buyers are paying more than one-fourth of their income for housing these days, according to preliminary information from a study he is conducting of the characteristics of home purchasers. A study last year estimated that in the early 1970s, people were paying only about 16 percent of their incomes for mortgages.

However, a real estate offices in some neighborhoods where sales traditionally have been strong, brokers say business earlier this year is still good -- in some cases even better than a year ago.