New restrictions by the Veterans Administration on its home loan guarantee program could kill 90,000 home sales by the end of next summer, according to government and private industry sources.

News of the changes -- set to go into effect March 1 -- have sent shock waves through the local real estate and building community and also worried veterans expecting to secure VA-insured loans.

Real estate agents this week scrambled for details about the new rules and how they would affect home buyers. But agents reported receiving different interpretations from lenders and various VA officials.

Veterans who are first-time home buyers and current military personnel who are transferred frequently are expected to be the hardest hit by the new restrictions, which the VA says are designed to meet provisions of the budget-balancing Gramm-Rudman-Hollings law, according to industry leaders.

The new requirements call for:

*Limiting the amount of a loan the VA will insure to $90,000. Most VA loans are now limited by lenders to $133,250.

*Eliminating the so-called "reinstatement" privilege that has permitted veterans or persons serving in the military to obtain another VA-backed loan when the previously held VA loan was paid off.

*Stopping those holding high-interest VA loans from refinancing through the guarantee program at the lower interest rates prevailing today.

Although the provisions are aimed at complying with Gramm-Rudman, the strongest support for slashing the VA program apparently is coming from the Office of Management and Budget rather than from the VA, according to industry sources.

"The Veterans Administration's plan is to implement these changes on the first of March," said Robert O'Toole, director of the agency's loan guarantee service.

Real estate agents said the changes are certain to produce hardships for military personnel transferred in or out of the Washington area this spring.

The new rules will strike stinging blows to the housing market and would-be home buyers in areas such as Washington, San Diego and the Norfolk-Portsmouth areas where "there are a lot of military," according to Warren Lasko, executive vice president of the Mortgage Bankers Association. Banks across the nation also make VA-insured loans.

Lasko said homes in the "Springfield, Annandale and Arlington" areas, where many military families live to be close to military bases and the Pentagon, will be affected. Lasko and some real estate brokers said the cuts could produce a decrease in the price of some homes in the Washington area.

Veterans groups have attacked the changes.

"We're not interested in handouts, only in the opportunity to work for our own homes," said Robert Muller, president of Vietnam Veterans of America Inc.

Mike Leaveck, a spokesman for that group, said OMB officials supporting the changes fail to understand the VA loan guarantee program or "simply don't care."

Realtors and buyers said they were more worried about the $90,000 cap and abolishing the reinstatement privilege than about changes in the refinancing policy. Lasko and several bankers warned that as much as 25 percent of the market that is generally involved in VA programs could be affected.

The VA's O'Toole agreed with housing and lending leaders that the upcoming restrictions could cut sales of 90,000 units nationwide during the next seven months.

Late this week, lenders and VA officials attempted to reassure agents and buyers that loans in the pipeline before March 1 would not be jeopardized.

"If an application has been received and signed and dated by a lender before March 1 , it will be honored," O'Toole said.

New-home builders predicted trouble for some contractors, especially those who already are committed to spring and summer construction plans designed to attract first-time and low-end buyers. The $90,000 cap is below the average sales price in the Washington area, which now is well above $100,000.

Kathy Osen East, a spokeswoman for the Northern Virginia Builders Association, said, "It is going to have a great impact on the housing industry locally. We have a big percentage of in-service military and veterans buying new homes."

Many of those units were sold to first-time buyers whose builders said they had targeted the units to meet space and financial needs of first-time buyers and those eligible for VA loans. Builders of move-up homes in the $150,000 to $250,000 range said many sales would have fallen through if veterans buying those homes had not been able to sell their existing houses and regain the right to use the VA-insured program.

Industry leaders said they hoped specific guidelines would be published soon in the Federal Register to help clear up some of the confusion that has generated phone calls to regional VA and congressional offices. O'Toole said VA officials are working with OMB to get guidelines published as soon as possible.

Kevin Connelly, a Perpetual American Bank official, said, "There was a lot of confusion. All of us were caught by surprise." He questioned the announcement on Feb. 6 of implementation of such major policy changes effective March 1 "without much prior warning."

Before the enactment of Gramm-Rudman, the VA loan program, which guarantees lenders only $27,500 of the total loan involved, was considered an entitlement program with no ceiling. However, after the balanced budget act passed, the loan program for the current fiscal year was capped at $11.5 billion. That figure was protested by veterans groups, who said the ceiling should have been closer to $18 billion.

O'Toole said the budget estimate did not take into account the exceptionally strong sales market or the number of users seeking to refinance now that interest rates are hovering at 10.5 percent, a far cry from the 14 and 15 percent figures that dominated the market just a few years ago.

VA officials said the program simply would run out of money soon if some way of cutting back is not developed, because of the pace of loans granted this fiscal year.

Bills have been introduced in the House and Senate to raise the ceiling to restore provisions that will be nixed by the pending changes.