Mountain Home was authorized by an act of Congress in 1901. A local congressman, Walter P. Brownlow, was instrumental in pushing the act through Congress. His message to the Board of Managers of the Soldiers' Homes was so eloquent that they recommended Congress appropriate $1,000,000 instead of the $250,000 that Brownlow had originally requested.
The 1901 act establishing the Home specified the eligibility for admission as follows:
Section 5. That all honorably discharged soldiers and sailors who served in the war of the rebellion and the Spanish American War, and the provisional army and the volunteer soldiers and sailors of the War of 1812 and the Mexican War, who are disabled by age, disease, or otherwise, and by reason of such disability are incapable of earning a living, shall be admitted into the Home of Disabled Volunteer Soldiers. Approved: January 28, 1901.
Mountain Home had a large farm, which produced vegetables and livestock. It also had a greenhouse, a fire department, and a security force. Among the original buildings built between 1903 and 1905 which are still standing are the chapel, theater, library, and mess hall. The mess hall now houses The Museum at Mountain Home.