The £13.5m redevelopment of the Reservoir Road YMCA will include 83 self-contained flats, with four to six beds set aside for 16- and 17-year-olds. Community facilities, including a nursery, will be open to the public.
The YMCA hopes young residents will be able to integrate themselves into the community through paid and voluntary work at the centre.
Work starts on the redevelopment next year and will continue for up to 27 months. The YMCA said it was currently looking at how to maintain services during construction.
"There will be a focus on tackling the issues faced by today's young people with an element of provision for pre-school children," said a YMCA spokesperson. "This provision will be shaped through further consultation with current and new stakeholders within the community and in particular young people."
Alan Fraser, chief executive at Birmingham YMCA, said: "This has been a real journey of faith for Birmingham YMCA. Three years ago this seemed like a pipe dream, but with most of the funding secured earlier this year and now receiving such positive backing from the planning department, we can look forward to making the dream a reality."
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