Find an appropriate area to set up your home studio. You may want to use an open room with plenty of natural reverb, or someplace isolated from the rest of the home.
Purchase or download a digital audio program with multitracking capabilities. For hip-hop music, you will want a program with professional mixing options and plenty of available samples, particularly for percussion. Consider a program like FL Studio, Logic Pro or Cubase to get you started.
Stock up on the appropriate instruments. For hip-hop, you will need most often need a drum machine, a bass and at least one keyboard synthesizer. If you have a MIDI keyboard, you can use it as a controller for the software synthesizers on your digital audio program, eliminating your need for a keyboard synthesizer. You can also use bass guitar patches on your synthesizer instead of a real bass, if you don't mind your music having a more electronic sound. Depending on the type of sound you hope to achieve, you may also need guitars, live drums or turntables.
Consider which peripherals you will need. You should purchase some type of USB interface that includes ports for instruments, microphones and monitor headphones. This will allow you to record directly to your computer with the highest quality, canceling out most noise and interference. You may also need converters to connect certain instruments to your computer. For instance, if you use MIDI keyboards, you will need a MIDI-to-USB converter.
Purchase and set up your microphones. You should have at least one microphone stand with at least one XLR-compatible vocal microphone. To avoid unwanted feedback, set up a pop screen in front of the microphone. You can purchase these devices at most major music stores or online.
Test to make sure your digital audio program recognizes signals from all of your external devices. To do this, simply open the program and see if you can get sound from each device. If certain devices are unresponsive, check your connections and then select the devices from your "Preferences" or "Options" tab.