The Homestead Act was designed to settle the undeveloped land west of the Mississippi River, held by the United States government. The Act passed Congress in 1860, but President James Buchanan vetoed it under pressure from the South. The Homestead Act was sponsored in Congress by Galusha A Grow and supported by the Republican party. It offered applicants a free title to 160 acres of land, if they fulfilled three requirements. First they has to file an application, then make improvements to land, and finally file the deed to the land. The applicant had be at least 21 years old, have never fought against the United States government, and had to live on the land for five years while making improvements. President Abraham Lincoln sign the Homestead Act into law on May 20th 1862.
About 40% of those who applied for a homestead completed the process and obtained the deed to their land.
Another web site for more information about this subject is Homestead Act of 1862 and Teaching With Documents: The Homestead Act of 1862