Get a pair of Behringer C2 mics (they're dirt cheap and surprisingly good) and do lots of experiments with mic positions, rooms and room treatment. If you can get someone else to play the guitar, put a pair of closed back headphones and hold the mic in different positions to find the best spot. When you've learned all there is to be learned about best mic position (takes a lifetime or 3) get some better mics if you still think you need them.

Suggestions: Röde NT5, AKG C535, Neumann KM184, Schoeps MK41 - the sky's the limit!

A large room with soft furnishings is a good start. Bedrooms are often used as makeshift studios for a good reason - a well-upholstered double bed makes a good bass trap. Living room with soft armchairs + sofa also good.

If you want to get into proper acoustic treatment, Ethan Winer's Acoustics Articles are an absolutely brilliant place to start.

Anahata