The site on Lytton Street where the affordable housing complex will be built.
The City of Lincoln Council agreed on Monday at an Executive meeting to put £140,000 towards building 17 affordable homes in Lytton Street.
The money will come from the levy collected by the council from developers under what is known as Section 106 (of the Town and Country Planning Act 1990).
A Homes and Communities Agency grant of £761,000 will also go towards building the six two-bed flats, nine two-bed houses, and two three-bed houses.
The Lytton Street site was formerly occupied by Brett Oils, who sold the site to Lindum Group.
Lindum then discussed plans with Waterloo Housing Group to develop the site.
A planning application was submitted by the Waterloo Housing Group and was approved in December 2009.
The Stamp End Tenants and Residents’ Association intended to get village green status for the waste land next to the Lytton Street development.