I'm using TrueSpace 6.6 for all of my import/export, but that may be al little bit above your budget.
To use your own entity (terrain or other items) you need the model in .x (directX) format, a texture (can be bmp or tga file format), a .fpe file and small 64x64bmp file with the same name as the .fpe file. The .fpe files I do write myself, it needs to point to the model and the texture.
Probably the easiest to do is use E.C.S.
http://www.seqoiagames.com/seqoiacorp/index.html to create your entities. It does most of the work for you as long as you've got a model and texture.
I don't use them myself, I do everything myself, but a lot of people use it and seem happy with it. I think the lite version can only use .x files, but the pro version does .x and .3ds also. Almost any 3D application can import/export a .3ds file.
If you need help with E.C.S. I'm sure someone can help you, many people do use I think.