The Urban Development Funds 2021–2027 (UDF 2021–2027) is the third generation of the Urban Development Funds in Bulgaria. For the 2021–2027 programming period, they are financed under the Regions in Development Programme (RDP) and the Competitiveness and Innovation in Enterprises Programme (CIEP), co-financed by the European Union.

Urban Development Funds have been implemented in Bulgaria since 2012, when the pilot JESSICA initiative was launched, targeting the country's seven largest cities. During the 2014–2020 programming period, the Sustainable Cities Fund managed the Urban Development Funds for Sofia and Southern Bulgaria, successfully investing the available resource in 70 projects.

Following a public procurement procedure, the Fund of Funds (FoF) selected the Sustainable Cities Fund as the financial intermediary for two lots under the UDF 2021–2027: UDF South and UDF North 1, with a combined public contribution of EUR 191.38 million. The public resources allocated to the instrument comprise risk-sharing finance, an embedded capped portfolio guarantee, and grants under the Regions in Development Programme. Including the co-financing provided by the Sustainable Cities Fund, the expected total investment portfolio of the two Urban Development Funds—South and North 1—is projected to exceed EUR 250 million.

For the first time under the Urban Development Fund instrument, the 2021–2027 Regions in Development Programme introduces a combination of support, consisting of debt financing and grant funding within a single operation, both to be delivered by the financial intermediary. The total grant budget available amounts to EUR 65.63 million and may be used to finance technical support, provide a capital rebate linked to the achievement of investment results, or award an investment grant covering up to 40% of eligible project financing.