A home recording studio might mean anything from a computer with a USB microphone to a garage full of racks of equipment.

Getting the sound in
Face it – most home studios are based on one person recording one instrument at a time. You can do this for fairly low cost ($100-$300) if you already own a computer.

Base system 
Most computer sound cards are pretty good. If your soundcard has stereo line in (some laptops don’t) then usually the only problem is noise (hiss) as the frequency response for a sound card is pretty easy to get right.

With a good enough sound card – you are ready to connect keyboards/synth and drum machines right up and use software to track them.  USB mics and USB MIDI controllers can solve these connections for low dollars.

Audio Interface 
I’m a big fan of a dedicated audio interface and traditional microphones.  If you want to use microphones you will need a mic preamp. Microphones put out very low signal and your computer expects about one volt RMS for full volume.

You can use a computer audio interface or a standard mixer for this job. Be careful of low cost (<$250) mixers as they may add noise.

you can get a real nice USB mic interface with phantom power and a mic preamp for about $100 (Macki, Presonus, others).  If you budget $50 for a mic (and cable and stand) and $100 for some quality headphones you just built a recording studio for $250.

A little more advanced is a Mackie ProFX8v2 8-Channel USB mixer ($230) with 4 mic inputs.  Be aware that you are only recording two channels at a time.  To get more channels at a time, you are dipping into serious hardware.

Mixing it

Don’t ignore listening to it.  If your computer has built in speakers, they aren’t good enough.  You have the choice between good headphones or Good studio monitors. You need the good headphones anyway, so you can start with them, but studio monitors are much, much easier and better to mix to.   See my bit on Getting the Sound Out.