The District government has $5 million in cheap mortgage money that it can't give away.

The money is earmarked for the purchase houses in some of the city's poorer neighborhoods such as Shaw and Anacostia, but after two months there have been no takers.

The $5 million is part of $30 million that the District made available in August in the city's first attempt to help first time home buyers. The program offers 30-year mortgage money at an interest rate of 11.4 percent, about 3 percent lower than the current market rate.

While the $5 million can only be spent in certain neighborhoods, the District is also finding few takers for the remainder of the money, which can be applied to a home purchase anywhere in the city. The city has lent only $587,000 of the low-interest mortgage money to 10 homebuyers in 2 1/2 months.

Another $4 million is scheduled to be lent to 72 additional homeowners by the end of next week, according to officials with the Housing Finance Agency, which administers the mortgage loan program.

"Everybody is enthused about the program, but from where I sit as director of the agency, the program is moving a little slower than I would like," said Tom Zuniga, director of the Housing Finance Agency. "I'd clearly like to see some more movement in the target areas."

Out of the $30 million, the city set aside another $7 million exclusively to help households earning less than $30,000 a year buy homes, but only a small fraction of that money has been lent.

About 215 city residents have applied for loans totalling an estimated $9 million.

The low-cost mortgage money is available to anyone earning less than $42,960 a year who wants to purchase a first home in the city costing no more than $100,000 or a condominium costing no more than $90,000.

"Three days after the program was announced our switchboard was lit up constantly and I think there are some people out there who now believe we are fresh out of money," Zuniga said.

"We're financing houses all over the city, from upper Northwest to Southeast," he added, but sales in the target areas "are moving very slowly."

Zuniga suggested that the public's lack of interest in target areas may be due to "a problem of these areas being designated by the U.S. Treasury, who went ahead and picked areas like the Navy Yard" in Southeast without consulting the city.

In addition to Shaw and Anacostia, the target areas include Columbia Heights in Northwest, Trinidad, Parkside, and Truxton Circle near North Capitol Street and Florida Avenue, in Northeast, Capitol Hill South around the Navy Yard, Carrollsburg near South Capitol and M streets, and Douglass along Alabama Avenue in Southeast.

Target areas are comprised of neighborhoods where the average income ranges between $8,000 and $11,000 a year and rentals account for more than 60 percent of all living units, according to census data.

"We're trying to meet with community service agencies to promote the idea of moving to target areas," Zuniga said.

The 10 homeowners who received their mortgages under the program should be moving to their new homes within a few weeks, Zuniga said. Five of the families bought single family homes while the other five bought condominiums, he said. Six of the homeowners will live in Northwest, two in Northeast and two in Southeast, he added.

The average price of the first 10 homes financed under the program was $63,000 compared to the citywide average of $120,000, housing officials said.

"There's been a fairly good level of disbursement, with the average income level of the home buyers at $28,500," said Zuniga of the first group of approved applicants. "Some incomes start at about $18,000, but not much lower than that. All the home buyers are considered to have R-1 credit -- the best credit you can have--even that group of 17 buyers with incomes under $30,000," he said. He predicted that "all of the $7 million set aside for lower income buyers for the program's first 90 days should be loaned out" by Nov. 1.

The HFA does not accept applications directly from the public. Prospective homeowners must apply at one of seven participating lending institutions. These are Colonial Mortgage Service Company, First American Bank, National Permanent Bank, National Bank of Washington, Washington Federal Savings and Loan, Intercity Mortgage Company, and Independence Federal Savings and Loan.