The National Association of Home Builders has urged Congress to extend a program that provides 7 1/2 per cent mortgage interest rate for moderate and middle income home buyers.

Vondal Graviee, vice president and treasurer of NAHB and a home builder in Birmingham, Ala., recently outlined NAHB's position on a number of housing programs in testimony before the Senate Committee on Banking, Housing and Urban Affairs.

NAHB supports extension of the Brooke-Cranston interest subsidy program, due to expire on Sept. 30, because it would protect the housing industry against the tight and expensive mortgage money conditions that precipitated the 1974-1975 housing collapse, Gravlee said.

By reducing interest rates to 7 1/2 per cent, the program also helps many first-time buyers who have been priced out of the housing market because total housing cost s have gone up much faster than family income in recent years.

The Emergency Credit Act of 1977, sponsored by Sen. William Proxmire (D-Wis.), chairman of the banking committee, would extend the Brooke-Cranston program, Gravlee noted. But the Proxmire bill would increase the interest rate ceiling from 7 1/2 per cent to the FHA rate (now 8 per cent) and establish an income limit based on 120 per cent of the median income of the area in which the property is located. Gravlee urged Congress to keep the lower interest and the present mortgage and price ceiling instead of imposing the tighter income limits.

Gravlee also suggested a few administrative and legislative changes that would stimulate construction of apartments for low income families under the government's Section 8 rental assistance program.

Section 8, unlike previous low income housing programs, provides rental assistance payments to tenants rather than subsidizing mortgage interest rates. Low and moderate income families pay from 15 to 25 per cent of their incomes for rent, with HUD making up the difference between the tenant's payment and the fair market rent for the unit.