Hundreds of Marylanders in hot pursuit of the American Dream spent the night on the doorstep of a bank, mortgage company or savings and loan this week, but the ordeal was well worth it for most.

They were the first in line Monday morning to qualify for the latest offering of low-interest home mortgage loans financed by the sale of $100 million in tax-exempt bonds through the state's Mortgage Purchase Program (MPP).

"Demand was incredible," said a spokesman for the Maryland National Mortgage Corp. "People were lined up Sunday at midnight to get in early on Monday morning."

The state has sold $223 million in bonds since the program, which has financed the purchase of 5,335 homes, began in 1980. But demand is greater than ever, said Peter Ponne, acting director of the state's single-family home programs.

Under the latest offering, qualified buyers who make between $20,000 and $30,000 a year could get a 30-year, fixed-rate mortgage at 10 3/8 percent interest, compared with current market rates of about 13 percent, Ponne said.

The state, for the first time since the program began, set aside 35 percent of the funds for people making less than $20,000 annually. They could qualify for mortgages with a 30-year, fixed rate of 9 5/8 percent.

A $50,000 mortgage financed at 10 3/8 percent would cost $452 a month in principal and interest, compared with $553 a month for a conventional loan at 13 percent, said Ponne. The same loan at 9 5/8 percent interest would cost $424 a month.

Only individuals with incomes below $28,000 a year and families with incomes below $30,000 a year can participate in the program, and loans are limited to a maximum of $60,000, said Marilyn Corbett, a spokeswoman for the Maryland Department of Economic and Community Development.

In Montgomery and Prince George's counties, the amount is enough to purchase most typical two-bedroom condominiums and some town houses, she said.

"You can borrow as much as the entire cost of the house. You don't have to pay a down payment, but you have to put down the closing costs and other pre-paid items," Corbett said.

Most of the 35 lenders participating in the program around the state reported exhausting their allotment of mortgage money on Monday, the first day of the offering. But some still had funds available as late as Thursday morning, and nearly all were taking applications to place on a waiting list, according to telephone interviews with bank officials.

"Many of the lenders are saying they've exhausted their allocations, but most will experience some fallout. People who have been allocated money may not end up with a mortgage," Corbett said.

Patrick J. Casey, branch manager for the Kissell Co., said $170,000 was still available through the low-income program at the close of business Wednesday. In all, the firm had issued 25 loans from its $2.7 million allotment, about half of which financed purchases in Montgomery County, he said.

Joyce Brangan, an administrative assistant who is handling the program for Manufacturers Hanover Mortgage Corp., also said demand was light for funds from the low-income program.

Corbett said some prospective home buyers begin planning to buy a house under the program months in advance. Buyers must have a signed contract in hand at the time they apply for a loan.

Detached houses, town houses, condominiums and modular homes all qualify for the financing, but mobile homes do not, she said.

The state, she added, is planning to make money available again in the fall.