A purchase option for Jose, who has scored three goals in 13 La Liga appearances this season, is also expected to be included in the deal.
Nuno Espirito Santo’s side have won just one of their last nine Premier League games since then, falling to 14th in the table.
Jose had been considered as an option by several clubs across Europe, with the 29-year-old’s stature at La Real reduced by prodigious Swedish striker Alexander Isak.
The Brazilian had scored over 10 goals in each of the last four La Liga seasons prior to this campaign.
Speaking recently, Espirito Santo hinted at Wolves’ intent to bring in a new forward. "The loss of Raul was terrible and has had a big impact on us, there is no doubt about that,” he said.