Smith has revealed that there is an option in the contract of 23-year-old central defender for Villa to make the move permanent at the end of the 2018-19 campaign.
The Villa manager has also suggested that if the youngster does well in the coming months, then he could earn a permanent move to Villa Park.
Smith told The Birmingham Mail about Hause: “We have an option to buy. That is something I have spoken about before. We have a few loans in the building already.
“I am not a massive fan of loaning players where we are developing them for other clubs. If we feel it is going right with Kortney we have the option to buy him at the end of the season.”
Hause made his debut for Villa in their Championship game against Wigan Athletic away from home at the DW Stadium on Saturday afternoon.
The defender came on as a substitute in the 63rd minute, as the Villans lost 3-0.
The former England Under-21 international, who can also fill in at left-back, had a pass accuracy of 63.6%, won one header, and made two tackles and two clearances, according to WhoScored.