I was in the same boat as you about a year and a half ago when I was looking for a chocolate lab. We ended up paying around $800 for a purebred. What you get with a purebred vs. a mutt is the history and the general disposition. A reputable breeder should let you meet the dog's parents, should have a reason for breeding (not just the money, should be either showing, trials, etc) and should have an affection for the breed and protecting the breed. With labs, look at the hip certification and the eyes (can't remember what the genetic eye defect labs are prone to is called). Labs can be great pets but they are active and incredibly smart. When they're not kept active enough, they use that brain in other ways (usually destructive). If you can't keep a lab excercised, you might want to consider a less active breed. I notice on days when mine doesn't get enough excercise, he's a pain in the ass, chewing on things, running laps in the house, just an overall nuisance. They're smart dogs and like to be engaged. They're not a dog to just throw a bone to and leave them alone, they do better when interacted with like field trials, obedience, agility, etc. Just my $0.02 as a current lab owner.
As others have said, the dog doesn't have to be a purebred to make a good pet. Good luck!