For all my no-budget shorts, we typically ask the actors if they have clothes that will work. Surprisingly, we have found actors with decent wardrobes. We are ALWAYS upfront with each actor before casting about the clothing, especially if it will get dirty or bloody.
We used Halloween costumes for 2 of leads on our last finished short (everyone else provided their own stuff), but the scene was at a Halloween party, so it fit. However, my original script called for the lead to be in a bunny costume. But once I saw the cost of these (couldn't rent due to needing to have blood on it), I changed it to something more accessible. Actually, my new costume turned out better and more creepy than the original idea.
For the short I'm doing now, the wardrobe was bought at Wal-Mart. Spent less than US$30 on multiple versions since one was going to get dirty and wet. I don't even ask my cast to provide clothes that I know we are going to stain, tear, or damage in any way.