From Today in History at the Library of Congress:
President Abraham Lincoln signed the Homestead Act on May 20, 1862. The act provided settlers with 160 acres of surveyed public land after payment of a filing fee and five years of continuous residence. Designed to spur Western migration, the Homestead Act culminated a twenty-year battle to distribute public lands to citizens willing to farm. Concerned free land would lower property values and reduce the cheap labor supply, Northern businessmen opposed the movement. Unlikely allies, Southerners feared homesteaders would add their voices to the call for abolition of slavery. With Southerners out of the picture in 1862, the legislation finally passed.
The National Park Service provides some additional background.
People interested in Homesteading first had to file their intentions at the nearest Land Office. A brief check for previous ownership claims was made for the plot of land in question, usually described by its survey coordinates. The prospective homesteader paid a filing fee of $10 to claim the land temporarily, as well as a $2 commission to the land agent.
With application and receipt in hand, the homesteader then returned to the land to begin the process of building a home and farming the land, both requirements for “proving” up at the end of five years. When all requirements had been completed and the homesteader was ready the take legal possession, the homesteader found two neighbors or friends willing to vouch for the truth of his or her statements about the land’s improvements and sign the “proof” document.
After successful completion of this final form and payment of a $6 fee, the homesteader received the patent for the land, signed with the name of the current President of the United States. This paper was often proudly displayed on a cabin wall and represented the culmination of hard work and determination.