The Malcolm McNeils moved into their new house last week, just in time for the holidays. It is the first home the family of five has ever owned.

The house would have been beyond their reach without the help of an innovative new homeownership program established by a coalition of private, nonprofit housing agencies in the District.

Malcolm and Sharon McNeil and their three sons, aged 10, six and five, are the first family to buy a house in the program, paying $42,500 for the four-bedroom house on Fourth Street NE. The McNeils, who have a combined annual income of about $17,000, will make monthly payments of about $425, less than the $450 monthly rent they paid for a substandard rental home in the Columbia Heights section of Northwest Washington.

Being a homeowner "feels wonderful," said Sharon McNeil. "This is much nicer than the last place which was old and dumpy."

Malcolm McNeil works as a parttime security officer for the Visiting Nurses Association, and at a variety of other jobs. His wife is patient care coordinator at Community Medical Care, a private clinic in Northwest Washington.

At a time when rising prices, unemployment and high interest rates put home ownership beyond the reach of more and more people, the McNeils became owners through sharing their equity with an investor. The investor provides purchase money and in return gets the tax breaks the McNeils do not need because of their income bracket.

Housing counselors held a workshop recently to spread the word about the new program. About 20 people attended and another 30 or so who have heard about it through other sources are also interested, according to Sister Kate McDonnell of Housing Counseling Services, one of the nonprofit agencies.

The program was organized by Manna, a nonprofit corporation formed six months ago by Housing Counseling Services and three other District of Columbia nonprofit organizations specializing in low-income housing--For the Love of Children (FLOC), University Legal Services and Funds for an Open Society (OPEN).

Manna is designed to help "a group of people who can no longer find affordable housing to buy in the District of Columbia," said Jim Dickerson, a low-income housing specialist for the last 13 years. Manna buys run down houses, which it can get relatively cheaply because of their condition, and renovates them. The work is done by "community-based workers, Manna's own construction experts and the labor of prospective occupants when practical," Dickerson said.

"There are people . . . dying to get property off their hands, and we get calls from a variety of sources," he added.

One source is a private developer Dickerson would not identify because the businessman "wants to help but he wants to be anonymous." The developer makes "a thousand or two" dollars in profit, Dickerson said.

Manna also makes a modest profit on each sale, which is added to funds used to purchase other houses and to provide rental assistance to very low-income families through FLOC's Hope and a Home program. Dickerson directs Hope and a Home, which helps families who "are in crisis and threatened with family separation" if they cannot find homes.

Financing is provided by OPEN, a nonprofit mortgage company that has been providing home loans for low-income residents since 1976 in Washington, Philadelphia, Baltimore and other cities, and by savings and loan companies willing to make funds available.

The equity-sharing scheme was created by attorney Rick Eisen, a housing activist, to help the McNeil family buy their Fourth Street home. The investor paid 90 percent of the $11,000 down payment and of closing costs, and the McNeils paid 10 percent. The interest on their $31,000 mortgage is 12 1/2 percnt.

Similiar equity-sharing has been used successfully for purchase of apartment buildings, said Dickerson. Investors in these transactions will be "looking for tax advantages" and want to invest in socially worthwhile projects," he said. Manna's home buyers usually pay interest below market rates if OPEN finances the loan, or at market rates--now around 12 1/2 percent--if the loan is from a savings and loan company.

Purchase prices of the homes are usually well below market rates, Dickerson said. For example, he added, the McNeils' home, for which they paid $42,500, was appraised at $45,000 after the renovation. The appraised value of other houses in the neighborhood range from $46,000 to $50,000.

The McNeils had expected to pay $390 in monthly payments, but got the higher bill of $425 per month because the city government assessed the value of the house at $20,000 more than the purchase price. The family plans to appeal to the city for a lower assessment, and Dickerson said he expects the appeal to be successful.

If families want to buy but cannot manage even the lower payments offered through the Manna program, "we continue to . . . work with them until they are able to improve their financial status," Dickerson said.

In the shared equity scheme designed by attorney Eisen, the investor's money is handed over at the time of rehabilitation. The investor pays 90 percent of the down payment and closing costs, and the low-income family pays 10 percent. The two then sign an agreement giving the investor 90 percent ownership of the property, and the investor thus becomes the beneficiary of 90 percent of the tax deductions for mortgage interest and depreciation. The family makes the monthly payment for the mortgage, taxes and interest.

At the end of six years, the family can buy out the investor at a price fixed at the time of the original agreement. In the McNeils' case, they will pay $15,000, an amount $3,500 more than the investor put in.

Income guidelines of the federal Section 8 rental assistance program are used to qualify families as Manna home buyers. These guidelines range from a maximum of $17,950 for a one-person household to $27,250 for a five-person family and $32,050 for a family of eight or more.

One of the most important elements of the Manna plan is that housing counselors "will follow people who buy houses, and help them before they get in trouble" with payments, said McDonnell of Housing Counseling Services. CAPTION: Picture, Malcolm McNeil, the first participant in the Manna program describes the purchase of his $42,500 house on Fourth Street NE. By Sharon Farmer for The Washington Post