I've used homemade fabric softener made with hair conditioner and didn't find the results to be any different (no better, no worse) than commercially available fabric softeners. However, since you don't use the commercial products, it can't hurt to try the homemade ones, can it? You might also try wool dryer balls.
If the fabric doesn't soften up after 3-4 washings, it's not likely to ever soften up. Is it 100% cotton?