My budget here is really tight too. It's a good reason to stick to 1/6 scale vinyl. XD
I'm going with obitsu bodies from Junkyspot, and a lot of my heads for females and younger characters will likely be salvaged from barbies from yardsales and other such sources. Those are often in rough shape, but can be anywhere from 1-5 dollars around here. I also found this site while hunting around that has a lot of fairly cheap barbies if you look in the selection of loose/unboxed ones. I haven't bought anything from them yet, but the prices look good. And loose works out fine if you're planning to make modifications.
http://home.comcast.net/~rgree3/index.htmlI used to sew clothes for my cousin's Barbies a lot. It's not that hard to adjust a real pattern down to 1/6 scale, but then adjustments always have to be made for Barbie's proportions. And Obitsu has different proportions than Barbie, so even if I still have any of my old patterns tucked away somewhere (I have a lot of the old 1/1 ones, just none of my adaptions that I've found so far) I'll have to re-adapt from scratch.
I definitely recommend having some cheap muslin or something on hand for working out new patterns. I remember I sometimes used my gran's used dryer/fabric softener sheets, but that was ages ago and we don't use those here.
Since I've gotten into this in order to make fanfic-ish photo comics, I'm going to end up having to make a lot of 1/6 scale patterns from scratch. Some of the Star Wars ones will be a real challenge to get right, but I'm kind of looking forward to that.