Inside a shabby row house on Fifth Street NE, Michelle Seminara tries to imagine her dream home as it will look someday. There will be an open living area, a kitchen with an island and a breakfast nook, oak cabinets and hardwood floors, a basement rental unit.

But right now, it looks more like something out of a horror flick.

A moldy plastic orange jack-o'-lantern grins eerily from the tattered linoleum floor of a back bedroom. There's a huge machete under the kitchen sink and syringes on a closet floor. Refrigerator shelves are smeared with black, rotted food. A big hole in the living room ceiling reveals the bathtub drain upstairs. Doors and baseboards are coated with roach droppings.

It's hard to see beyond all that.

"I feel like I have no imagination right now," said the new owner of this three-story brick house in Stanton Park. "I'm thinking, like, 'Oh, my God.' "

Seminara, a hearing-impaired single mother who now rents a neat brick two-story colonial in Cheverly, is one of 68 people who each recently won the right to buy a boarded-up, run-down house in the District for a mere $250. That was the easy part. Now Seminara and her fellow homesteaders are tackling the hard work.

Urban pioneers, they are catalysts for what District officials hope will be the renaissance of many of the city's transitional neighborhoods. The houses they are taking over were once considered eyesores. Many of them were first damaged in the 1968 riots, then purchased and renovated by the federal government and turned over to the District. Over the years, they were allowed to deteriorate. These houses, once emblematic of inner-city blight--and of a government and its dysfunctional housing bureaucracy--now are supposed to play a small but important role in the economic revival of the District.

Lynn C. French, director of the District's Homestead Housing Program, calls it "rebuilding the city."

"On the one hand, we're getting rid of abandoned and poorly maintained property, and on the other hand, we're putting healthy homeowners in there," French said. "You've got to do both to have a healthy community."

One night a week, the homesteaders attend a mandatory 12-week training program. They meet with architects from the University of the District of Columbia to draw up blueprints and must solicit bids from three contractors. Within a year, they must have brought their properties up to code and moved in.

This is no rehab flip-it-and-get-rich-quick scheme. Their renovations will cost $30,000 to $220,000, depending on the property. They must live in their houses for at least five years; if they sell sooner, they must pay the city a penalty.

To qualify for the lottery, participants must be at least 18, not have owned a house within the last five years (unless the home was lost through a divorce) and be eligible to borrow the money needed to rehabilitate the property. There are no income limits to enter the lottery itself, but there are income restrictions for qualifying for a $10,000 loan from the homestead program to help pay for settlement and other costs.

The homestead program is 12 years old. The announcement that in this round, the city would for the first time open the lottery to anyone--not just D.C. residents--drew 15,000 requests for applications. Two thousand five hundred people qualified to enter the Aug. 31 lottery. An additional 75 houses will be raffled off this winter.

In addition to the larger urban goals of stabilizing neighborhoods, said David Gilmore, the court-appointed receiver of the District Housing Authority, the program is intended to help make property owners out of low- and moderate-income renters.

"For the first time, we're giving them a shot at the American dream," Gilmore said. "I do think that's what people aspire to."

Doing Her Homework Michelle Seminara is determined to succeed as a homesteader--even if her homework assignments take her hours to finish.

To get general information about rehab loans, for instance, Seminara had to call a special telephone operator to relay the questions she typed on her TTY telephone. The operator then typed the responses of a loan officer so Seminara could read them on her telephone screen. The tedious back-and-forth took two hours to finish.

"People get very impatient with me," Seminara said. "I hate that."

She perseveres, she said, because "no deaf person has ever done this before."

Seminara is not quite totally deaf, and after 14 years of speech therapy, she is able to speak. In the hearing world, she reads lips. Among the deaf, she simultaneously uses sign language and talks, as she does with her 2 1/2-year-old son, Will, who can hear but already has learned to sign.

Seminara, a curly-haired fireball, talks a mile a minute and laughs frequently at her self-deprecating jokes. Her enunciation is slightly muffled and her tone flat, but she makes herself understood.

In the homestead training course, where housing counselors explain how to budget and architectural consultants talk about planning a renovation, Seminara sits in the front row so she can lip-read. The organizers offered to provide a sign language interpreter. Seminara refused. She did not want special accommodations. She can take care of herself.

Seminara moved to Washington, with its 70,000 deaf people, from the West Coast 10 years ago to attend Gallaudet University.

Surrounded only by hearing family and friends, she grew up "frustrated. . . . I constantly missed a lot of things." Through Gallaudet, she found her niche.

Entrants in the lottery selected a wish list of three houses from the city's offering. Seminara picked buildings close to Gallaudet, where she still goes weekly to practice with a modern dance troupe. She got her first choice, a brick row house in the 700 block of Fifth Street NE assessed at $157,262.

Seminara's hope is to stretch her $100,000 rehab loan to convert the unfinished basement into a one-bedroom apartment so that she can rent it to a Gallaudet student. ("The good thing is if I make noise upstairs, they can't hear me," she said with a giggle.) Both of her roommates in Cheverly are friends from college, and one will move into the house to help Seminara cover the loan repayment.

Seminara, who works as a disability benefits representative for the Social Security Administration, said she grew up in a middle-class family that always lived in nice homes.

"I wanted a home. I wanted my son to have a home," she said.

Seminara is aware of the risks involved in her project. The neighborhood may be a little too rough for her toddler son. The contractor may be difficult to work with. The renovation may cost more than she expects. But with the help of her housing counselors, friends and her son's father and grandparents, she believes she can finish the project.

"I'm anxious. I have some fear," she said on the day that she made her first purchase for her new house: a $9.99 knob for the front door. "But I feel confident that I can do this because I have a lot of support of friends and family."

She is on good terms with her son's father, a former security guard at Gallaudet, and his family. This day, her son's grandfather, William Terrell Sr., arrived at the house in Stanton Park to help with the installation. He screwed the knob into the door as little Will stood in the vestibule of his future home and watched his grandpa. The child looked out the front door and announced with glee:

"We're all going to live here."

CAPTION: Michelle Seminara gets some help from William Terrell Sr., her son's grandfather, in taking down the plywood boarding up the front door of her house.

CAPTION: Michelle Seminara stands with her son, Will, outside the house she bought for $250 after winning a D.C. housing lottery. She is starting renovations.

CAPTION: William Terrell Sr. examines the basement floor in Seminara's new house. She hopes to rent out the basement as a student apartment.