Interfaith Housing Alliance plans to build 10 affordable housing units in Cascade between Cascade Road and Md. 550.
The Washington County Commissioners on Tuesday voted 4-1 to allow the single-family homes to be phased in at five units per year.
The project is planned for 23.68 acres.
Four of the commissioners agreed to the phase-in to deal with any potential capacity issues at Smithsburg High School.
The county's Adequate Public Facilities Ordinance (APFO) allows developers to submit mitigation plans to resolve school capacity problems.
Planning Director Michael Thompson said the phase-in plan for the Cascade homes was Interfaith's mitigation plan.
The county will issue five building permits this calendar year and five more at the start of the next calendar year, Thompson said.