Recording Revolution on YouTube does a great video on this topic.

He goes through the key components, Computers, DAWs, Audio Interface, Microphones and Monitors into great detail from start to finish. He explains how it is very possible to get started in home recording on a budget.

This video is definitely worth a watch for anyone interested in starting up a home studio.

[youtube http://www.youtube.com/watch?v=eaYNM7p6Z5s&w=640&h=360]