The Reds offered to pay a larger proportion of Sahin's £115,000 wages, swinging the deal in their favour.
There will also be an option to buy the player for £14m at the end of the loan.
"Hopefully in the next 24 hours we'll get some confirmation," said Reds boss Brendan Rodgers. "It's quite far [along]. He's a very good footballer."
Sahin had been expected to join Arsenal, having privately expressed a preference for the north London club but Liverpool and Real have now agreed a deal.
Real boss Jose Mourinho had given the go ahead for Sahin to move to the Premier League after the playmaker struggled to make an impression at the Bernabeu since a move from Bundesliga champions Borussia Dortmund last summer.
Sahin signed a six-year deal with the La Liga outfit but made just 11 appearances for them last season as they won the Spanish league title.
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