Last Updated on August 17, 2026
Let’s be honest here. You know it. I know it. Your neighbor knows it; Iceland is expensive. Well, for a lot of people they end up spending a ton of money in Iceland, but my trip to Iceland didn’t cost me as much as a lot of other travelers. If there is one thing that will definitely eat your budget it’s all the accommodation costs, so I have gathered all the best hostels in Reykjavik to stay in so that you’re not forking over all your travel funds in one blow. I know that a lot of people like to stay in Reykjavik and take a day trip from there or they like to base themselves in Reykjavik for the night before heading off on their volcanic extravaganzas, so no matter your travel style, there is a hostel on this list that is going to suit your fancy. I’d like to say that I have good taste in accommodation choices, so browse around and book your perfect hostel!
If you’re keen to know where I stayed while spending a day in Reykjavik, it was at The Galaxy Pod Hostel. I have some mixed feelings about it since there are both good and bad things about it. The good is that it’s right across the street from Kronan, my preferred Icelandic grocery store that has awesome vegan options, it’s quiet, has good wifi speeds, and is very unique. The bad is that it’s a bit of a walk away from the central hub of the city, there isn’t a designated working area, and it’s on the more expensive side compared to the other hostels in Reykjavik. I’ll talk more about it below if you’re interested (just scroll down and read about the Galaxy Pod Hostel, #2 on this list), but for now, let’s hop into the other nine best hostels in Reykjavik!
This post may contain affiliate links for the products I mentioned, but as always, all opinions are my own. I make a small commission, at no extra cost to you, when you make a purchase or booking through these links. This helps to support this space and keep me blogging, which I am so extremely thankful for.
A Quick List of the best hostels in Reykjavik
5 Best Hostels In Reykjavik
Kex Hostel
Best Overall Hostel In Reykjavik
Location
Fun fact, ‘kex’ is the Icelandic word for a biscuit. Why is the hostel named after a biscuit? Well, this contemporary and vintage-y space was built out of an old biscuit factory! Based on this evidence, I think it’s safe to assume that they serve up a mean breakfast with great vibes. So, what are you waiting for?! The Kex Hostel is in a great location in the main hub of Reykjavik, up the road from the Harpa Concert Hall, Sun Voyager, AND the Hallgrimskirkja Church. Bonus is right across the street and if you need gas before you head to the Blue Lagoon or to start your ring road trip, there’s a gas station nearby as well.
Atmosphere
One of the things that a lot of travelers love about this hostel is that it’s very social without being too over-the-top and rowdy like a lot of hostels can be. There is a large reading area with a whole wall of books to choose from as well as an eating/bar area that is great for getting work done if you’re a digital nomad or if you have any other job that goes with working while traveling. Also, since the hostel is very centralized, you’ll have zero problems meeting new friends over drinks or dinner!
Amenities
The Kex Hostel has awesome amenities, my favorites being that they serve up an awesome array of delicacies for breakfast. You do have to pay for breakfast, but trust me, once you see it you’ll be forking over your kronas instantly. Wifi is another must-have while I travel so I love that they have both a working space and great wifi. I love hostels that cater to the needs of travelers and this hostel does it all right.
LOFT Hi Hostel
Best Location / Voted Iceland’s Best Hostel / Best Party Hostel In Reykjavik
Location
I gave the LOFT Hi Hostel the award for the best location because I walked by this place after buying gloves from North 66 and I remember thinking to myself, “damn, I wish I would have stayed there!”. You can stay in this hostel, wake up and walk right up into the heart of Reykjavik. It’s more on the ‘coastal’ side of Reykjavik, AKA closer to the harbor and the concert hall, but you are on the exact same road as the Hallgrimskirkja Church, so you can see it from the hostel and it’s just a few minutes walk away from tasty restaurants, quaint coffee shops, the Punk Rock Museum, or if you’re really adventurous, there are (ethical) whale watching tours that also leave from the port by the concert hall! If you want to stay at the best hostel in Reykjavik with the best location, Loft Hi is your go-to!
Atmosphere
The atmosphere of this hostel is social while still a hostel that you’re able to relax at. There is a rooftop area that is PERFECT (twice for emphasis, PERFECT) for enjoying a morning cup of coffee or tea overlooking the city. The LOFT Hi Hostel also has a nice working area that resembles a coffee shop/cafe type of set up which I know all my fellow nomads will appreciate as well. If you want to curl up with a good book, there is also a spot upstairs with some couches for lounging and leisuring at your own disposal. This hostel has that classic hostel life/vibe that a lot of people are looking for, so if you want to meet new people and come alive with the city, this is the place for you.
Amenities
The amenities here are similar to the previous two that I have mentioned. There is breakfast available here for a small price, a kitchen for cooking, wifi, common areas, a bar, hot showers, and clean facilities. I feel like listing out all of the amenities would be a lot of a hassle, so everything listed below is what is exclusively offered by the hostel. Make sure you check out the entertainment section… they have foosball!
Bus Hostel Reykjavik
Best Hostel For Digital Nomads / Cheapest Hostel In Reykjavik
Location
If you plan on taking advantage of Iceland’s public transportation and transfer options, you’re going to love this hostel. Not only does it share its location with the Reykjavik Buse Terminal, its the first and last stop on the bus AND tours to the Blue Lagoon also depart from the hostel. What more could you need?! While most of the other hostels are on the northern side of Reykjavik, the Bus Hostel is on the southern side, but just as close to the Hallgrimskirkja Church and other iconic Reykjavik sites! If you’re not keen on walking, they have free bike rentals! While it isn’t on the main road in Reykjavik, it’s only a stone’s throw away!
Atmosphere
The vibe of the hostel is really close to that of a trendy coffee shop. The common space even looks like one! There are large windows looking out to the streets of Reykjavik and plenty of seating to go around to get some work done, which is why this is the best hostel in Reykjavik for digital nomads! There is even a small patio where you are able to sit down and enjoy drinks from the hostels Buzz Bar! I was shocked to see this hostel priced at such a low price (~$17 / night for a mixed dorm) since you can do everything in this hostel, including book tours! If you like having everything in one spot and a little ease of travel, stay at the Bus Hostel!
Amenities
This hostel probably has the best amenities out of all the other hostels on this list from the bus stop being right outside, bookable tours inside, and in a good location, AND FREE parking?! Hello!? SCORE! The only thing that is missing is a free breakfast, but those are few and far between for hostels in Reykjavik, so it’s not a huge missing piece to your puzzle. If you’re planning on cooking your own food, they also have a fridge and freezer where you can store your items until you head out!
Dalur HI Eco Hostel
Best Amenities
Location
If the hostel location isn’t a top priority on your list, the Dalur HI Eco Hostel is another fantastic hostel option that has great prices, amenities, atmosphere, and overall vibe. It’s a bit out of the way of downtown Reykjavik, but as I said before if the location isn’t a huge deal, then this is a great option to stay in!
Atmosphere
My favorite part about this hostel is that it gives me a similar vibe to a summer camp: warm, friendly, inviting, and eccentric. It’s a lot different looks-wise than a lot of the other hostels on this list. There is a huge outdoor area with a pool that adds even more to the summer camp vibe, but either way, it’s likely that you’re going to meet some really awesome people at this hostel! The rooms are flooded with natural light from the huge windows, a detail I love, personally, and there are plenty of working spaces if you happen to be a digital nomad! If you feel inspired by very bright, open spaces then this is the hostel for you!
Amenities
All the amenities are fairly standard, free wifi, free parking, etc., but there are a couple of others that you might fancy: wheelchair-friendly, security lockers, 24-hour reception, and laundry facilities! They go the extra mile with all their amenities.
B14 Hostel
Most Modern Hostel / Most Aesthetically Pleasing Hostel In Reykjavik
Location
So the amenities and atmosphere are both 10/10’s, but the location might be unfavorable, especially if you don’t have your own rental car. If you want to walk to downtown Reykjavik, it’s going to take upwards of an hour to get there one way, but only a short, seven-minute drive and you can park at the church and explore at your leisure. So, it’s technically not a bad location, but since most of the hubbub is downtown, some people don’t want to have to bother to drive, so it’s a detail worth noting. It’s all really up to your preference, but the location doesn’t make this a bad choice!
Atmosphere
I did a double fist to the air when I saw the photos of this hostel. Absolutely stunning. I love it when hostels builders/owners take the time to put intricate details into the living spaces and if you like modern facilities and that modern/retro vibe, this place will rock your socks off. The neutral tones keep an even calming aura (feels weird to say but it’s true lol) and whenever you look at the pictures of the hostel, you’re going to feel yourself relax a little bit. Well, at least I did. My only beef with the place is that it doesn’t look like there’s a common area, so if you need a working space you might need to hit up a coffee shop, but I know we aren’t all aspiring digital nomads so it’s not so much a huge negative, just something I thought I would note. Other than that, love this place, love the vibes, love the price!
Amenities
So you cannot book this Hostel through the Hostelworld website, so that’s why these amenities are looking a little different compared to all the other ones, but as you can see with modern decor meets modern amenities in this hostel. I’m all for free parking, free wifi, and a solid kitchen, so if you want to whip up some killer cuisine before you head out on your road trip, this kitchen has it all (and you guessed it, it’s also aesthetically pleasing).
More guides for your adventures in Iceland
How Much Does An Iceland Trip Cost?
I didn’t know there was an HI in Iceland! It looks really cool – then again, all of them do! I’ve wanted to stay in KEX for years as I’ve heard so many great things about it, although the Galaxy one looks awesome too. Great list, and very comprehensive! 🙂
Yes! They have great hostels and they’re right in the middle of it all! (: I’m hoping to stay at Kex on my next visit!
I’ve admittedly never stayed in a hostel before, but this would definitely be a great way to save money in Iceland! I like how you’ve broke it all down, very informative!
I generally try to stay in at least one on every trip I take – Being around a lot of people all the time can be a lot for me lol
Good to know there are many budget friendly lodging options in Iceland!
Of course! and there is always the option of camping if you want to save even more money! >> The 12 Best Campsites In Iceland (: