Building a Home Studio - Audio Interface
The Most primary element that encompasses a recording studio is a computer. Contrary to what many people may think there isn't a special breed\brand or type of computer that is made directly for the purpose of recording audio. Any computer can be made optimal for recording audio with just a few adjustments. Firstly, it would be of great benefit if your computer was purchased within the last decade. Secondly, a minimum system requirement of 2.5 GHz, 4 GB Ram and 500 GB hard drive should serve as a decent system within itself. Higher specs is always recommended.
Just as important as the computer is the Audio Interface which you have attached to it. Most computer's built in sound cards just aren't good enough to make quality recordings especially if you're recording multiple instruments at a time; for instance vocals and guitar. An audio interface is responsible for getting audio in and out of your computer, it's what you will connect your microphone(s) to as well as your speakers (studio monitors). There is primarily three types of audio interfaces, your selection will depend on your needs and what you intend to record.
USB Audio Interfaces
These audio interfaces are usually small and portable. They're well suited towards a mobile setup but can be used on a stationary setup as well. They have limited number of inputs and outputs and are great for simple recording tasks, usually just vocals or vocals and/or guitar, keyboard, etc.
Firewire Audio Interfaces
Firewire interfaces are usually slightly bigger than USB Interfaces and offer a few more extra inputs & outputs. They connect to your computer's Firewire port so before purchasing this type of audio interface check to see if it is compatible with your machine. You can search for pictures of Firewire ports on the web and cross check them against your computer to see if you have them. Firewire audio interfaces are said to be more stable than USB interfaces but are a little more expensive.
PCI Audio Interfaces
These interfaces are usually geared towards the most demanding of recording tasks, for instance recording an entire rock band with 25 to 35 microphones transferring audio to a computer simultaneously. As you might imagine this type of interface would be the largest of the three and the most expansive. They can only be installed on tower (desktop) computers and require you to add a piece of hardware to the expansion slot on your computers motherboard. The setup for these is usually more complicated but not so much that someone wanting to put together a decent recording studio can't handle.
If you're a musician looking to record yourself or a bedroom producer looking to make electronic music I would suggest going with a USB or Firewire Interface. Preferably a Firewire interface if you can afford it.