The nine-acre site off Miller Road, north-east of Preston city centre, is to be redeveloped into 78 houses and a 61-apartment extra care scheme under plans lodged by contractor Seddon Construction and housing provider Community Gateway Association.
The homes would be a mix of two-, three- and four-bedroom detached, semi-detached and mews properties.
Under the proposals, all of the houses would be designated as affordable and available for rent or shared ownership.
The one- and two-bedroom extra care apartments would be available to elderly people for affordable rent.
The three-storey, 72,000 sq ft apartment block would feature a bistro, activity room, hairdresser, beauty salon, and a 40-space car park.
Levitt Bernstein and Baldwin Design Consultancy are the architects for the project. PWA Planning is the planning consultant.
In February 2019, Preston City Council approved outline plans for 140 homes on the site, lodged by Homes England.
The former mental hospital was demolished in 2018 after Homes England bought the site from the Lancashire Care Foundation Trust for £3.2m in 2017.