Planning a trip to Melbourne on a budget? Discover the best cheap hotels and hostels near public transport, supermarkets, and amazing local food hotspots.Finding a great place to stay in Melbourne without draining your bank account doesn't mean you have to sacrifice comfort or location. Melbourne is famous for its incredible coffee culture, hidden graffiti laneways, and vibrant arts scene, but it can quickly become an expensive city if you aren't careful about where you sleep.Fortunately, the city features a fantastic Free Tram Zone across the Central Business District (CBD), meaning if you pick your accommodation strategically, your daily transport costs drop to exactly zero. Staying close to major transit hubs, affordable supermarkets like Coles, Woolworths, or ALDI, and quick bite options like a 24-hour 7-Eleven can save you hundreds of dollars.Here is a curated review of the top 12 best cheap budget hotels and hostels in Melbourne that offer the absolute best value for your money. 1. YHA Melbourne CentralAddress: 562 Flinders Street, Melbourne, VIC 3000Approximate Price: $35 - $55 USD per nightLocated on the western edge of the CBD, YHA Melbourne Central is a dream spot for transit-heavy travelers. It is only a short five-minute walk from Southern Cross Station, which is the main arrival terminal for airport buses and regional trains. The facility features a fantastic rooftop terrace with barbecue gear, a huge communal kitchen, and modern security lockers.Step outside and you are directly within the Free Tram Zone. For groceries, the Coles supermarket inside the Spencer Street DFO shopping center is just a block away. There is a 24-hour 7-Eleven right down the street for late-night snacks, and you are surrounded by affordable laneway cafes serving authentic Melbourne espresso. This is the ultimate budget location because it cuts out your airport transfer stress while keeping you connected to everything.👉 View the latest prices and room availability for YHA Melbourne Central on Agoda2. Europa MelbourneAddress: 310-314 Queen Street, Melbourne, VIC 3000Approximate Price: $30 - $50 USD per nightEuropa Melbourne prides itself on bringing a premium feel to budget traveling. The property offers uniquely designed bunk beds with privacy curtains, power sockets, and reading lights, alongside excellent shared lounges.Positioned perfectly near the northern end of the CBD, it sits just a three-minute walk from Melbourne Central Station and the historic Queen Victoria Market. This proximity makes it arguably the best budget spot in town because you can buy incredibly cheap, fresh produce directly from the market to cook in the communal kitchen. An ALDI supermarket is nearby on Franklin Street, a 7-Eleven is around the corner, and the surrounding blocks are packed with cheap, authentic Asian noodle bars and dumpling joints.👉 View the latest prices and room availability for Europa Melbourne on Agoda3. Space HotelAddress: 380 Russell Street, Melbourne, VIC 3000Approximate Price: $35 - $85 USD per nightSpace Hotel is a hybrid property that perfectly bridges the gap between a high-end youth hostel and a budget boutique hotel. It offers everything from shared dorms to private queen rooms. The standout facilities include a rooftop sun deck with a blue hot tub, an on-site fitness center, and a private cinema room.Situated near the Old Melbourne Gaol and the lush Carlton Gardens, this northern CBD location is fantastic. It is less than five minutes from Melbourne Central Station and multiple tram routes. A Woolworths Metro is located just down Russell Street for daily essentials, and a 7-Eleven is a mere two blocks away. Food lovers will adore this location because it borders Lygon Street, Melbourne’s famous "Little Italy," where you can find enormous, affordable pasta bowls and wood-fired pizzas.👉 View the latest prices and room availability for Space Hotel on Agoda4. Flinders BackpackersAddress: 35 Elizabeth Street, Melbourne, VIC 3000Approximate Price: $30 - $45 USD per nightIf you want to be right in the absolute center of the action, Flinders Backpackers is hard to beat. The facilities include an expansive common area with pool tables, a massive communal kitchen, and free breakfast options.The location is as central as it gets. You are quite literally steps away from Flinders Street Station, the city’s primary commuter rail hub. A 7-Eleven is right on the corner, and a massive Woolworths supermarket sits directly across the street on Elizabeth Street. Because you are at the intersection of the city’s best laneways, cheap and iconic food options like Degraves Street are right outside your door. It is the best budget location because you will never need to spend a single cent on transportation to explore central Melbourne.👉 View the latest prices and room availability for Flinders Backpackers on Agoda5. Melbourne City BackpackersAddress: 197-199 King Street, Melbourne, VIC 3000Approximate Price: $32 - $48 USD per nightMelbourne City Backpackers is a warm, highly social hostel known for its welcoming staff and free continental breakfast. The property provides clean, air-conditioned dorm rooms, secure luggage storage, and a lively common lounge where it is easy to meet fellow travelers.Tucked away on King Street, you are a mere short stroll from Southern Cross Station and the beautiful Flagstaff Gardens. Trams run constantly past the block, putting you deep inside the free travel perimeter. A local Coles supermarket is located nearby at Spencer Street, and multiple 7-Eleven stores flank the surrounding blocks. King Street and nearby Bourke Street are lined with affordable pubs, burger joints, and casual takeaway spots, making it an incredibly convenient base camp for anyone trying to save money.👉 View the latest prices and room availability for Melbourne City Backpackers on Agoda6. The Village North MelbourneAddress: 78 Howard Street, North Melbourne, VIC 3051Approximate Price: $28 - $45 USD per nightFor travelers who prefer a slightly quieter neighborhood vibe while staying within arm's reach of the city center, The Village North Melbourne is a wonderful pick. It offers an outdoor courtyard, social communal areas, a fully equipped kitchen, and regular evening events.Located just on the city fringe in North Melbourne, this spot keeps you out of the noisy CBD traffic while remaining perfectly accessible. The tram line is a two-minute walk away, taking you straight into the city center in under five minutes. It sits right behind the Queen Victoria Market, which gives you instant access to cheap groceries and excellent budget-friendly food night markets. Local cafes, independent bakeries, and a nearby 7-Eleven supply everything else you could possibly need.👉 View the latest prices and room availability for The Village North Melbourne on Agoda7. The Nunnery AccommodationAddress: 116 Leicester Street, Fitzroy, VIC 3065Approximate Price: $32 - $60 USD per nightSteeped in local character, The Nunnery is housed in a beautiful, historic building that dates back to 1888 when it was a real convent. Today, it is a hip, artistic budget guesthouse and hostel offering an outdoor courtyard, bike rentals, and charming lounges filled with vintage decor.This property is situated in Fitzroy, which is widely celebrated as Melbourne's trendiest, arts-centric neighborhood. While technically outside the CBD, you are only a short walk away from the Free City Circle Tram line. A Woolworths supermarket is easily reachable on Brunswick Street. Fitzroy is an absolute paradise for budget foodies, bursting with cheap vegan cafes, legendary local pubs offering $15 steak specials, and fantastic street food vendors. It is the best budget pick if you want to experience authentic local life rather than just the tourist center.👉 View the latest prices and room availability for The Nunnery Accommodation on Agoda8. The Mansion MelbourneAddress: 64-90 Victoria Parade, East Melbourne, VIC 3002Approximate Price: $35 - $55 USD per nightThe Mansion Melbourne offers a boutique, "flashpacker" style experience inside a beautifully restored heritage mansion. It features high-speed internet, a cozy on-site cafe and bar, and a beautiful green garden area where you can unwind.Positioned in East Melbourne, it sits right on the border of the CBD and the trendy Fitzroy district. The Free City Circle Tram stops right outside the front door, giving you effortless access to transport. For food and supplies, you can walk to the supermarkets on Brunswick Street or head directly into the eastern side of the CBD. The immediate area is surrounded by tranquil parks like the Carlton Gardens, making it an incredibly scenic and relaxing place to stay on a tight budget.👉 View the latest prices and room availability for The Mansion Melbourne on Agoda9. ibis budget Melbourne CBDAddress: 97-103 Elizabeth Street, Melbourne, VIC 3000Approximate Price: $50 - $85 USD per nightIf you are traveling on a budget but absolutely require a private hotel room with your own bathroom, the ibis budget Melbourne CBD is a phenomenal option. The property offers compact, clean, and highly functional hotel rooms equipped with air conditioning, flat-screen televisions, and private en suite bathrooms.The location is incredibly central, sitting directly on Elizabeth Street in the heart of the retail precinct. You are less than a three-minute walk from both Flinders Street Station and the underground Bourke Street Mall tram hub. A 7-Eleven is located right next door, and a major Woolworths Metro is just down the street. The real superpower of this location is the food; Elizabeth Street is arguably the city's best hub for cheap, fast, and delicious Asian eateries, offering huge portions of ramen, Malaysian roti, and Korean fried chicken at wallet-friendly prices.👉 View the latest prices and room availability for ibis budget Melbourne CBD on Agoda10. Mad Monkey MelbourneAddress: 539 Spencer Street, West Melbourne, VIC 3003Approximate Price: $30 - $48 USD per nightMad Monkey Melbourne is highly regarded for its upbeat social atmosphere, awesome rooftop lounge, and regular organized group events. The property features modern bunk beds with secure personal lockers, free high-speed internet, and an on-site bar.Located in West Melbourne, it offers a peaceful respite while remaining highly accessible. It is a simple ten-minute walk to Southern Cross Station, making regional travel or catching the airport shuttle a breeze. Trams run continuously from the end of the block directly into the city center. There are local convenience stores, a 7-Eleven, and several budget-friendly takeaway joints within a two-block radius, making it a fantastic spot to base yourself without overspending.👉 View the latest prices and room availability for Mad Monkey Melbourne on Agoda11. Great Southern Hotel MelbourneAddress: 44 Spencer Street, Melbourne, VIC 3000Approximate Price: $55 - $95 USD per nightThe Great Southern Hotel is an excellent choice for couples or families seeking an affordable private hotel stay. Housed in a unique historic building, it offers standard queen, twin, and large family rooms. Amenities include a 24-hour front desk, refrigerators in the rooms, and self-service check-in kiosks.This hotel boasts an exceptional location directly opposite Southern Cross Station. This makes arriving from the airport incredibly smooth, as you can walk straight off the SkyBus and into your room. Multiple tram lines cross directly in front of the building within the Free Tram Zone. For shopping, the Spencer Street DFO Coles supermarket is right across the road, and a 24-hour 7-Eleven is only a short walk away. With immediate access to the Yarra River waterfront and endless fast-casual dining options, it is one of the best value private hotels in town.👉 View the latest prices and room availability for Great Southern Hotel Melbourne on Agoda12. Elizabeth HostelAddress: 490-494 Elizabeth Street, Melbourne, VIC 3000Approximate Price: $28 - $45 USD per nightElizabeth Hostel is a reliable, straightforward budget accommodation choice that focuses on clean facilities, friendly service, and unbeatable prices. It features comfortable shared kitchens, laundry facilities, and a cozy TV lounge area.Situated on the northern end of Elizabeth Street, this property sits directly across the road from the Queen Victoria Market. This location is brilliant for budget travelers because you can walk across the street to source incredibly cheap meat, vegetables, and bread to prepare your meals. A major tram stop sits right outside the front door within the Free Tram Zone, a 7-Eleven is on the corner, and a Woolworths supermarket is a short walk away. The area is also highly popular with local students, meaning the surrounding blocks are packed with cheap food halls, bubble tea shops, and inexpensive bakeries.👉 View the latest prices and room availability for Elizabeth Hostel on Agoda