A pilot loan program involving a commitment of $1 million has been set up by Home Federal Savings and Loan Association to provide 100 per cent mortgages to qualified home buyers in the Anacostia area.

John U. Raymond, Home Federal chairman, said the project is being set up with the Neighborhood Housing Service, a non-profit group operating in that area, NHS will screen and counsel applicants.

NHS, which was set up to promote home ownership and rehabilitation in the historic Uniontown area of Southeast. Washington, is also active in 30 other cities. It was established by the Urban Reinvestment Task Force, composed of heads of the federal financial regulatory agencies and the Secretary of Housing and Urban Development. One of the aims was to make financials lending institutions more responsive to the needs of old, deteriorating city neighborhoods.

James A. Lowell, head of the neighborhood organization. said that home ownership has been increasing in recent months in Anacostia area, where most of the dwellings are 80-year-old, detached frame houses or row houses. He said that six-person NHS staff includes a construction consultant and that plans are being made for a tool lending program.

Raymond said several applications for loans are alreadt being considered. Borrowers will pay market rates (now about 9.50 per cent) without any subsidy or premium involved.

Raymond estimated that the designated funds probably will cover 30 to 35 loans for the older houses priced from $30,000 to $45,000.

The program was set up to side step federal limits that prevent savings and loan associations for making loans in excess of 95 per cent of the cost or value, or loans in excess of 80 per cent if there is seconary mortgage financing.

To provide the Anacostia home loans with no down payment, Home Federal will make a 90 per cent loan but initially disburse only 80 per cent. NHS will provide the remaining 20 per cent of the loan as a second trust. When the two loans have been curtailed to the point that the combined balances equal 90 per cent of the original amount, Home Federal will acquire the second trust note from NHS at par.

"The borrower's monthly payments of interest and principal curtail will remain the same throughout the 30-year term of this financing," Raymond said.

No mortgage discount points (a fee for loan placement to raise the loan yield) will be charged to the buyers. However, buyers will be obliged to pay cash for closing costs.

Raymond also said that Home Federal may provide even more than the promised $1 million for no-down-payment loans in Anacostia, depending on mortgage money availability. He emphasized that the $1 million represents a firm commitment approved by the S&L's board as the result of a recommendation made by Neil A. Crichton, vice president of Home Federal and a board member of NHS.

Crichton, who has worked closely with NHS director Lowell, commented: "There are a number of qualified purchasers who can afford to carry the monthly payments on a rehabilitated house in the Anacostia target area but some lack the usually required 5 to 10 per cent down payment.

"This plan will make it possible for these people to become owners. And we know from interviews that they are interested. We expect many will be able to qualify by income to handle the monthly payments."

Both Lowell and Crichton pointed out that applicants having sufficient liquid assets to apply for 95 per cent financing will not qualify for the pilot 100 per cent loans. They also said that efforts will be made to avoid unduly high prices in the area, which is showing a mild turnaround.

Many of the prospective buyers now rent the houses that they would become eligible to buy. Thus, they know the condition of the properties and they also get NHS professional counsel on likely needs and costs of any rehabilitation or repairs.