What is best (cheapest) home studio recording software?

There is no "best". It's like guitars - what's the best guitar? Well, not even Eric Clapton could answer that question. The real answer is "It depends". On what you're doing. And particularly, what you're NOT doing. Can't get much cheaper than free, and Audacity is free. It's also pretty capable. In fact, I set it up for my Mom many years ago, and recently played with it again (I have multiple pay-for DAW programs as well, but this was in the context of a class). It's grown up nicely. And it's free. So really, what I'm looking for is the answer to the "it depends" proposition. In what way is Audacity limiting you? If you're bumping up against limitations, maybe that's the time to look for something else. But every DAW has some limitations... that's why I use REAPER, and Sonar, and Vegas, and Acid, etc. The best advice... use Audacity as long as it's working for you. One problem I've seen among folks like me, geek + musician, is that we can spend way too much time screwing with the tech and not getting to the music. I had done this for a long time, and finally pretty much just gave up computer music and spent some quality years with just my guitars. I'm back only within this last year getting a little serious about computers in my music space. When you seem to be outgrowing Audacity, you'll know just what to ask about, and hopefully get direction toward a DAW program that fits your needs. And don't buy -- get the demos. Any program worth using has a free month-or-so demo version. You might give try REAPER a try. It's very good for what it does, even if not as feature packed as some of the others. It's very stable... it's my DAW of choice for multi track recording... Every other DAW I used has crashed in a live recording situation. REAPER has never crashed on me. A full function demo is available, which works for 60 days. After that it's $50 for individuals in most cases. Again, it's like the guitar. If you start out on a Martin or a Les Paul, you may not need an upgrade, ever. But you can start out on an Ibanez or a Epiphone or even a Yamaha and have just as good a guitar experience... until you don't. So if you ask me, "I have a Yamaha 6-string, do I need to upgrade to a Martin", I'm going to save the same thing... you'll know it when you know it. If you're happy with the Yamaha, stay there... you probably don't know enough to be spending a grand or more on a new guitar. Wait until you can make that decison from your own experience.  (for the record, I own two Martins, one Taylor, two Ibanez, one $20 yardsale nylon string 3/4" guitar, Epiphone and Line 6 electrics, and a weird "plastic" bass made by Switch).

If you're asking about software then I would definitely second what said about Reaper. It's easy to use, frequently updated, and more than capable of producing professional results provided that you have the know-how. However, considering that you mentioned M-Audio I can't help but think that you are more interested in hardware rather than software. For recording electric guitar all you should need is an audio interface with decent preamps. If you're on a budget I'd go with Focusrite as they are pretty solid and sound decent. Either the Saffire or the Scarlett line should be fine. For acoustic guitar you'll need both an interface and a microphone, however. I always recommend the Shure SM-57 for people just starting out as it holds up to just about anything you can throw at it.

Are you on Mac or Windows? If you do Analog Recording only ( not doing the MIDI things, VSTi etc) try Harrison Mixbus. But if you want a fully function DAW that can cover wide variety of Music Production, the option will be generic. If you're on Mac, Logic Pro X is your best bet $199 I think is still affordable. What I loves about Logic is, it can converts audio track to MIDI. So if I mix music that somehow the analog recorded bass drum tune isn't right, I convert this to MIDI, change to the right tune then convert back to audio. It work like a charm. It can be useful also for you as Guitarist. If you're on Windows : Cubase Elements, Presonus Studio One Artist, Cakewalk Sonar Artist, Reaper. Both Windows or Mac, please take a look on Presonus Studio One. If you want it cheaper, wait until the Black Friday's deals. I bought Studio One Professional on last year Black Friday's deals for 50% off. The DAW's that never have a discount or promo I think is Cubase and Digital Performer. If Pro Tools is your option, take a look on eBay you will find $200-$300 cheaper than the regular price. It's a full version not academic version. But mostly are Digital Download version so you needs to buy iLok 2. Just make sure the seller is legit by checking their testimonials first. Have fun with your music!

Free is the cheapest!  For PC use, I love Audacity software-it's full featured and FREE!  Listen here to learn how to get started recording from PC and MAC when Judy Reagan from Listeners Digest Podcast and I discuss on episode 4 of the Michele the Trainer Show:

I would endorse what has already been said about Reaper. When I first downloaded it, this software was fully functional with just a nag screen, if you didn't want to pay for it, but for home use, it is very reasonably priced, so I just bought a licence anyway. It is very sophisticated and does take a while to get used to, it is not as intuative to use, as some others. It has a large user base and useful forum, if you run into problems. Again get the best audio interface you can, onboard soundcards can sometimes be temperamental Samplitude Music (Studio 2013 version anyway) does come with a selection of instruments (bass, guitars, pianos synths etc, that get you up and running right away and is designed for people who want to record vocals etc and has a mastering section for creating your finished mix. Has an easy mode for basic recording but much more sophistication under the hood when you need it. This is a cut down version of the Magix much more expensive pro software. Don't get Magix Music Studio and Magix Music Maker mixed up they are different programmes, targeted at different users, Music Maker, is targeted at more loop based dance, hip hop style compositions. Music Studio for people who can play guitars etc. The best thing to do, is download and use the trial versions of a few different types of software and see which one runs best on your computer and suits the way you like to work. Cakewalk Magix Ableton Reaper etc. They all do similar things in different ways. It just depends, on which one you find easiest to get to grips with.