I've never seen a new graphics card that's under 1GB since 2012... Get a better one when your budget allows you to. Use a DVI-to-HDMI adapter unless you want to use Intel's substandard integrated graphics. However I don't think DVI supports audio, so you might have to plug in seperate audio if you use an adapter.
You need to take out the video card first in order to use the HDMI on the mobo. If all goes well you should have a display; if not put the video back and tweak BIOS. When a video card is plugged in it only uses the output on the video card.