When Richard and Ruby McKay learned six years ago that a home for mentally retarded adults was being established in the Alexandria neighborhood, they exploded with anger and fear.

"We didn't know what to expect," said Ruby McKay, 62, a retired secretary. "There are a lot of women and children in this neighborhood, and we wondered if they'd be safe. We didn't know what would go on in that house, and how well supervised the residents would be."

"We were worried about our property values," added her husband Richard, a 59-year-old railroad engineer.

The McKays live in a small, brick house a few blocks from T. C. Williams High School. Across the street, at 1400 W. Braddock Rd., five mentally retarded men and a counselor live in the group home that was established despite strong neighborhood protest.

In the last six years, the McKays and other neighbors say, they have discovered that their fears were unfounded.

"They have been good neighbors," said Richard McKay. "There have been no problems of any kind. I have very mixed emotions about this, but I also have tolerance and respect for them now because they are trying so hard to be congenial."

The McKays' initial concerns, according to experts in the field, are typical of those voiced by homeowners around the country.

At the same time, experts say, if more and more families like the McKays accept their group home neighbors, it could have tremendous -- and positive -- effects on the growing movement to create small, family-like settings for mentally handicapped people.

Still, proposals to establish group homes often provoke controversy. For instance:

Recently, Arlington residents tried to block plans for a group home at 1515 N. Nicholas St. The home was established, and there have been no problems, neighbors report.

Last summer Fairfax County residents, in the Springfield area, showed up at several public hearings in an effort to stop a three-year-old group home from moving from one section of the Springfield area to a new location at 7011 Essex Ave. The facility eventually moved in, with no problems.

Three years ago in Montgomery County, the site of a proposed group home was firebombed. The firebombing has never been solved. However, the home later was established, and neighbors say there have been no problems since.

In 1974, when the group home was proposed in the McKays' neighborhood, city officials met strong opposition at three turbulent public hearings.

"We saw a lot of B-grade movie fear," recalled Bill Perkins, a sponsor of the home, which is owned by Sheltered Homes of Alexandria, Inc., a private, nonprofit organization. "We tried to assure them that there was no link between mental retardation and sexual deviancy, but most of them wouldn't believe us. It is only after a period of time that people learn they have nothing to fear."

The reaction in Alexandria has been seen in other communities.

"It's fear of the unknown that causes the problems," says Elaine Joyce, executive director of the Northern Virginia Association for Retarded Citizens. "No more than 3 percent of the population is retarded, so most people have never encountered retarded people before. They confuse retardation with emotional illness, and the two conditions are not similar at all."

Nationally more than 62,000 people live in more than 4,400 group homes. In Northern Virginia, there are 123 people in 38 group homes and apartments, including six homes and three apartments in Arlington, two homes and a 12-unit apartment building in Alexandria and five homes and 10 apartments in Fairfax County. Officials say at least three times that many persons could live in such facilities if they existed.

Two major arguments made by opponents of group homes concern the fear of increased crime and the damage a group home might have on property values. But area police say they are unaware of any criminal problems created by the homes, and other officials say property values near group homes are increasing at the same rate as values elsewhere. For instance, land records show that one house on the McKays' block recently sold for $102,000, more than twice its selling price five years ago.

Professionals in the field say they are resigned to some controversy when a new home is proposed, but they plan to continue pushing for more group homes.

For one thing, the professionals say, group homes are better, emotionally and intellectually, for handicapped persons than isolated or institutional living.

Group homes also are part of a court-ordered process to move the remaining 140,000 mentally handicapped people out of the nation's institutions.

Finally, national figures show it costs $5,000 to $8,000 a year for someone to live in a group home, less than half the cost for a person in an institution.

Mark Long, an official with Sheltered Homes, says the experience in Alexandria points to the advantages of group homes. In the past six years, Long says, 27 people have lived in the home. The independence those people gained, he says, has helped several to live by themselves. Most of the residents, he adds, have gained enough confidence to move into supervised apartments run by Sheltered Homes.

The residents say they prefer the community setting to isolated apartments or an institution.

"I really want myself to be a man," said John Huber, 32. "It's a bigger step for me to be here, rather than in an institution. Here, when I have a problem, I solve it myself, instead of running to a counselor."

Darral Johnson, 23, who has cerebral palsy as well as mental retardation, said, "We love the group home. We have our friends here. We walk to the bank, go up to the (Bradlee) shopping center, and don't have any problems. At Christmas I went home to visit my mother, and then I came home to be with my friends."

And neighbors have lost their fears.

"I was vehemently opposed to it at first," said Henry Clark, 61, who has lived in the neighborhood for nearly 30 years. "I went to the meeting we had at a church to protest. But we've never had any problems with them, although sometimes they get confused and put the garbage out on the wrong day."

"Naturally, there were some concerns at first," adds Sharon Carnevale, 33, who has a 12-year-old daughter. "But overall we were in favor of the home. I think it enriches the neighborhood, and I think the kids here are healthier for growing up close to people with handicaps.