Set up your computer near a corner in the room where you wish to record and mix music. By recording near a corner, you will achieve a natural reverb effect due to your proximity to the walls. This can enhance vocal and other live recordings.
Download a music mixing program. You can choose from many free and open-source mixing options, such as Audacity, QTractor and Ardour, which will give you the benefits of a full multitracker and mixing board, but without the heavy expense. (See Resources for a complete list).
Invest in some 1/4"-to-1/8" instrument cables. These will allow you to plug your guitars, keyboards and other instruments straight into your computer via the "Line In" port, saving you the expense of a costly audio interface. Note that Line-In connections will generate some background noise due to the natural hum from your computer.
Purchase an inexpensive MIDI keyboard and plug it into your computer using a MIDI cable and MIDI-to-USB converter cable. Even a cheap child's keyboard with MIDI ports will suffice. A MIDI keyboard makes an important addition to the home studio as it allows you to access and control the software instruments included with your digital music program. In other words, you can use the keyboard in accordance with your music editor to create drum sounds, bass lines, sound effects and any other instrumentation that your home studio may be missing. With a simple MIDI keyboard, your sound options become limitless.
Hook up your MIDI keyboard. Plug one end of your MIDI keyboard into the "MIDI Out" slot on your keyboard, and plug the opposite end into the "MIDI In" slot on your converter cable. Plug the USB end of your converter cable into any free USB port on your computer.
Download a variety of audio loops and save them on your computer for whenever you might need them. An audio loop is simply a prerecorded sound sample that you can incorporate into a mix. For example, if you record a guitar and vocal section but do not have the right drum sound, you can use a drum loop to fill in the gaps. You can download audio loops on numerous websites that offer free archives, including Looperman, Free Loops and Soundsnap.