The Department of Housing and Urban Development is expanding an experimental set-aside program designed to help minority-group builders and developers provide a larger share of subsidized low-income housing, HUD announced yesterday.

A $10.2 million set-aside of funds in the department's Section 8 rental subsidy program will be allocated to 27 minority builders, including one in the District, and will assist the development of 1,500 new or rehabilitated housing units nationwide, HUD officials said. About 500 units were funded in a set-aside program last year.

Under the plan, HUD commits itself to giving Section 8 rental subsidies to low- and moderate-income tenants who rent in the targeted minority-built projects. HUD pays the difference between the rents the tenants can afford to pay and the fair market rent on the unit.

This earmarking of Section 8 funds should help minority builders and developers get financing for their projects, though HUD will not provide financing, a spokesman said.

The program, which attracted 900 applications for funds, will include aid to 465 units for the elderly.

In the District, $314,000 is to be earmarked for a 60-unit project by George W. Thompson and Associates and The Dillon Co.

"This is an effort to target assistance to minority businesses," Philip Winn, assistant secretary for housing, said at a press conference.