I got a knife while in Vietnam, but it looked drab with not proper handle or sheath. My next problem to overcome was my lack of leather working tools; leather punch, needle, cutters etc.
A little patience and basic tools got me what I wanted in the end

This project is low cost (I spent less than equiv 9USD) and will suit pretty much any home made or store purchased knife/sword

Step 1: Materials

Materials
-Knife/Sword of your choosing
-Stiff(ish) Leather, Dimensions will depend on blade size
-About 190cm of Paracord (preferably not gutted) or other medium thick twine
-Thread for sewing
-All purpose glue

Tools
-Craft Knife
-Heavy duty scissors
-Rasp
-Bulldog clips aka "Binder clips"
-Pliers
-Needle
-Drill with very small bit

Step 2: Sheath Cutting

-Place the blade on a bit of paper and trace around it
-Enlarge the template by 2.5cm on both sides then cut out
-Use some tape to stick it to the back of the leather
-Cut the shape out ONCE using craft knife and scissors
-Flip this shape over so its nice side up then used it as a guide to cut a second piece of leather

-For a belt loop, cut out a piece of leather 7-8cm high by 2.5cm less than the width of the template

Step 3: Sewing Prep

-Before you proceed with the next step, clip the sheath together down the side and insert the knife. If the sheath seems to wide, which it probably will be, trim it down a touch

-Mark a line 0.5cm from the edge down both sides of one piece
-Mark 0.5cm increments down all the lines on the leather
-Drill holes (making sure they are straight down) at the increment markings
-Position belt loop piece and do the same, but allow for thickness of belt

Step 4: Sewing

-Tread the strongest possible needle you can find
-Sew on the belt loop first, using the classic over-under stitch

-Continue by sewing the two halves of the sheath together using the same stitch. Sewing both ways will ensure maximum strength
-Use the pliers to help the needle through when it inevitably gets jammed

Step 5: Handle

-Fold the Paracord evenly in half
-Hold the fold onto the knife handle
-Make a girth hitch by passing the other ends around the handle and through the fold
-Wrap both free ends around the handle until you reach the other end of the handle

-Tuck end 1 under the last two wraps and up
-Poke end 2 between the last and second last wraps
-End 1 goes over last wrap then under and through
-Shove End 2 down under the whole wrap
-Repeat with End 1

-To cover the otherwise bare and ugly handle end, glue a thin strip of leather around it. This serves a double function as it stops your hand slipping off

This PDF has some other ideas that can be adapted for handle wraps

Step 6: Finishing

-Squeeze a spot of glue between the halves of sheath at the the corners
-Use the rasp to make the top of the sheath even
-Tidy up the sides with the rasp

-If you haven't already, sharpen the knife. Tim Anderson's Instructable is what I used to get a ridiculously sharp edge

-Tip-
-Increase the water resistance of the sheath by rubbing in or spraying on the waterproofing stuff for hiking boots