Watford's chief executive Scott Duxbury and sporting director Luke Dowling were able to negotiate the lower fee despite Newcastle originally asking £10million for the Holland international.
West Ham, Crystal Palace and Napoli had also made enquiries for the 27-year-old who has agreed a four-year deal and will be announced as a Watford player on Wednesday.
Newcastle wanted £10m for the Dutch international but Watford managed to lower the fee
Newcastle will replace him with Tottenham's DeAndre Yedlin for £5m.
Yedlin spent last season on loan with Newcastle's arch-rivals Sunderland and helped the Black Cats stave off relegation under Sam Allardyce.
The American international joined Tottenham in the summer of 2014 but never came close to dislodging Kyle Walker from the right back slot at White Hart Lane.
Janmaat had a host of clubs vying for his signature, including West Ham and Napoli
Janmaat joined Newcastle from Feyenoord two years ago and made 75 appearances for the Magpies in all competitions.
Along with the impending arrival of Yedlin, Newcastle signed versatile defender Jesus Gamez from Atletico Madrid earlier this summer as they seemingly prepared for the Dutch international's departure.