A painstakingly negotiated agreement would include a commitment by Iran to neither develop nor procure nuclear weapons and would reopen the Strait of Hormuz to normal oil traffic and lift the US blockade, the official told reporters.
It would only permit the release of frozen Iranian assets based on whether Iranian leaders meet the requirements laid out for them, the official said.
"If we see them honouring their end of the bargain, it's going to be very good for Iran, and if we see them not honouring their end of the bargain, then they're not going to get anything out of it," the official said.
Iran has offered a starkly different view of the draft proposal with few concessions made to the United States over the nuclear issue and control of the Strait of Hormuz.
The US official dismissed Iran's version of events, saying this is aimed at the Iranian leaders' domestic audience.
The memorandum of understanding could be signed in Europe in the next few days but no decision has been made yet on the location, the official said.
Once signed, it will begin a 60-day negotiation on the technical aspects of the agreement.
US President Donald Trump is travelling to France next week to attend a G7 summit.
"The negotiating team has got us in a very good spot but let's see here, we're not quite at the finish line yet, but we are very close," the US official, speaking on the condition of anonymity, told reporters.
The official said the terms of the deal accomplish Trump's core objectives and "gets it in a very, very good place at the end of it".
The MOU would lead to the dismantling of Iran's nuclear program and the highly enriched uranium would be destroyed on site and then taken out of the country, the official said.
The terms also include an inspection regime to ensure that it is enforceable in the long term.
Iran is believed to possess 408kg of highly enriched uranium.
Iran, if it complies, will be relieved of economic pressures, including the unfreezing of its assets and sanctions relief, the official added.
"The Iranians don't get anything upon the signing of the MOU or upon the negotiation itself," the official said.
Trump on Friday rejected the suggestion the United States had made major concessions to Iran.
In a post on his Truth Social platform, Trump said Iran's leaked comments on a deal with the US do not represent what has been agreed to in writing.
Iran's Foreign Minister Abbas Araqchi said on Friday on X that the memorandum of understanding had "never been closer" but warned against speculation over its contents until it was finalised.
Araqchi said Iran would share all details with the public in due course, in what he called Iran's responsible and transparent approach.
Trump on Friday reposted Araqchi's social media post.
Pakistan's Prime Minister Shehbaz Sharif on Friday said that a final, agreed text of a peace deal between the two sides had been reached.
Pakistan was working with the US and Iran to finalise next steps, Sharif added in an X post.
The United States wants a deal to ensure that Iran never develops a nuclear weapon.
Iran says it is not seeking one.
