An article on the city's Homestead Housing Preservation Program {"District Launching Homestead Project," Real Estate, Jan. 30} has apparently misled many, many Post readers.

Judging from the hundreds of telephone calls we received, the combination of the placement of the article in the "Virginia Homes" section and the critical omission of the fact that District residency is an eligibility requirement has led hundreds of suburban readers to call us to seek inclusion in the program.

The other unfortunate misperception stems from David Hilzenrath's having selected as examples the two largest houses -- each of which has an estimated rehabilitation cost that is far greater than that of the others. Mr. Hilzenrath neglected to balance his description by mentioning that two houses have estimated rehab costs of $3,000 and that another's estimate is $5,000. The range of most of the houses' rehab costs is from $22,000 to $62,000 -- quite affordable when stretched out in a mortgage.

The simple fact of the matter is that the homestead program offers an affordable, viable route to homeownership for the many hard-working citizens of the District who hold steady jobs but who have been frozen out of the homeownership market because of the high cost of real estate in this city. The District government is simply providing them with some leverage in the mortgage arena by selling property to them cheaply so that they can use it as collateral to finance their rehab work.

All of us will benefit: the homesteaders by gaining from ownership and its many secondary benefits, the city by eradicating unsightly, boarded-up buildings while strengthening its tax base with individuals who otherwise could not afford to own in our wonderful city. LYNN C. FRENCH Deputy Administrator, Homestead Program D.C. Department of Housing and Community Development Washington