In canon he used the murder of his muggle father to make the Gaunt ring (which is inset with the Resurrection Stone) a horcrux, the murder of a muggel tramp to make Slytherin’s locket into a horcrux, and the murder of an Albanian peasant to make Ravenclaw’s diadem a horcrux.

But you’re right, this makes it seem unlikely that a Muggle victim would work. (Damn, these small differences between canon and HPMoR can really confuse me …)

On the other hand, it seems possible to use up a part of one’s magic/life force to create a witch or wizard (cf. Hermione), which could then be killed to create a horcrux. So while these horcruxes aren’t free to make, at least they are not a zero-sum game, either.