I've got my original home-studio set up for under $1000 by using Garageband as my DAW, 2 condenser mics, and a $200 pair of monitors. I've been able to get some pretty clean recordings out of my equipment, but it took me a great deal of time and trial-and-error to learn how to use everything correctly. Get a quality microphone and start fiddling around with recording styles/microphone placement. Youtube has a wealth of knowledge and videos on how to pretty much do anything in a home studio, including how to get started on setting it up. There are plenty of cost efficient DAWs out there, so I think choosing the right fit for your project is also important.
There's also a lot of members here (Gocartmoz for one) who got excellent recordings by using 8 or 16-track digital recorders. For the most part, they are cost efficient and you can get your feet wet with recording/mixing.
-Michael