When George Ford, an Internal Revenue Service lawyer, hired a contractor this year to renovate his gutted Northwest Washington row house, he thought he had his financing firmly in hand.

The Fidelity Bond and Mortgage Co., he said, had verbally promised to lend him up to $100,000 -- enough to pay off his $32,000 note and $63,000 for renovation.

But yesterday Ford and perhaps 1,000 other would-be home buyers in the Washington area awoke to a stunning surprise: Fidelity had suddenly pulled out of the home loan business in the Washington area, leaving its customers holding as much as $50 million in now meaningless accepted applications and home loan commitments.

For Ford, it was time to start over.

Fidelity told him it would try to place his loan somewhere else, Ford said, but in the meantime, he has no financing and no assurance that any other lending institution will give him the veteran's loan that he wants.

Ford's plight is but one example of severe problems facing prospective home buyers here and elsewhere as money becomes scarcer and more expensive.

Most mortgage rates at Washington-area lending institutions are now well over 12 percent, some over 13 percent and one savings and loan association, Columbia Federal, said this week it had money to lend at 14 percent.

But for buyers such as Ford seeking Veterans Administration home loans, the problem of unprecedented high mortgage rates is compounded by a heretofore unheard-of number of "points" that lenders are requiring home sellers to pay before the institutions will lend money to a prospective buyer.

A "point" is equal to 1 percent of the loan, and as recently as early October, lenders were generally requiring sellers to pay four points, or 4 percent of the loan to lenders.

Points are charged by lenders in order to boost the return on VA and Federal Housing Administration loans, which until yesterday carried a maximum 10 1/2 percent interest rate. Starting today, the maximum rate on VA and FHA loans has been increased to 11 1/2 percent.

But as the Federal Reserve Board announced various measures in the last few days to make money more costly for its member banks, and thus possibly curb spending and the rate of inflation, mortgage rates have soared and so have the number of points charged sellers of properties being bought with VA and FHA loans.

By yesterday, lenders here were asking sellers to pay as much as 15 points on such loans, which amounts to $15,000 on $100,000 mortgages.

Ford was quoted 14 points on his loan, which he would have to pay, since he already owns his property and is refinancing it.

"There's no way I could afford 14 points," the 35-year-old lawyer said.

When he heard the allowable interest rate on VA loans had been increased, Ford called a reporter back to find out the new rate.

But he wasn't much happier when he heard it was 11 1/2 percent, a rate several lending officials said would still require sellers to pay eight or nine points, far more than most are willing to pay.

One real estate, Brian Logan, manager of Long and Foster's Capital Hill office, said his firm was advising prospective home buyers to fill out loan applications at two lending institutions, "hoping that one of them will still be in business at settlement."

With the fast changing market, Logan and one of his agents, Shirley Sprague, had to do some fast negotiating in order to save one deal from falling through after another lender, the Steed Mortgage Co. backed out of a $100,000 loan commitment this week to Air Force Maj. Robert Bolton and his wife, Air Force Capt. Norma Bolton.

The Boltons needed the money to help buy a renovated house costing more than $170,000 in the 900 block of Maryland Avenue NE. So now they are financing their home with three trusts -- by assuming the builder's $74,000 mortgage on the property, securing a $35,000 second trust at the Pentagon credit union, and getting a $23,000, four-year loan from the builder, Andy Hinton.

As it turned out, the Bolton's actually are paying $1,000 less in settlement costs than with their previously planned VA financing, Logan said.

Sybil Thornton, 39, of Temple Hills, said she went to settlement last week and was ready to move into her newly purchased town house in Burke when she found out that a $60,000 check from Steed to the seller of the town house had bounced.

"I don't know what's going on," the first-time would-be homeowner lamented. She said the various people in the transaction plan to meet today to try to solve the problem.

When money is tight, lenders often stiffen their credit requirements, as one couple found to its dismay. The couple, who has no children and a combined annual income of about $30,000, applied to one lender and was rejected. "We just didn't look good enough on paper," the husband said.

They are now waiting to hear from a second lender and are hoping to get an interest rate just under 12 percent.

"Right now I'm stretching to get this ($83,000 Capital Hill) house," the husband admitted. "I'm going to be using every dollar we can get out hands onto get it. We'll eat a lot of beans to get this house." If, before settlement, interest rates climb any higher, he said, "I would have to rethink the whole situation, even if it goes up an eighth of a point or a fourth of a point.

While a few real estate agents said they have noticed no slowdown in sales and buying activity in the Washington area, many say there has been a gradual slowdown, and that sellers now are more willing to negotiate on prices.

One agent said a Capital Hill client had a home with a price tag of $115,000 on the market since April. In desperation, the price was lowered to $99,900, but it still didn't sell. The owner finally took the house off the market, and is crossing her fingers, hoping that sales will pick up again next spring, the agent said.

Real estate people say that assumable loans -- loans in which a buyer takes over the payments on the mortgage for property already committed by a lender -- and owner financing are becoming more necessary in recent days.

"Sellers just have to be more flexible on financing now," said Joseph Kaplan, manager of a Colquitt-Carruthers office. "owners will have to be involved in financing, doing things like taking back second trusts."