La Fontana undercuts its two-star bracket contemporaries with friendly service and design savvy.

Providing 46 rooms along the central Calle Principe, the Villar is noteworthy for its rock-bottom prices and nifty wrought-iron elevator.

Situated along Calle Cruz, two minutes from the Puerta del Sol, the Marlasca is located in "hostal central." But what makes the Marlasca different is the professional service—there's always somebody at the reception desk...

Hotel San Lorenzo, perched just off Gran Via, impresses to the nines with its country style and bargain rates.

The Nuria's location, on the bustling Calle de Funecarral, is fantastico: it's minutes from Gran Via and surrounded by the chic stores and cafes that make Chueca the 'it' neighborhood.

The Hostal Dominguez is a respite from the buzz of the Chueca's trendy bars and clubs.

The mammoth Hotel Asturias, located one block east of Puerta del Sol, offers a whopping 175 rooms, almost all with private balconies overlooking the street.

There are dozens of family photos from across the decades lining the lobby's halls and walls. It will certainly make you feel right at home!

Hostal Alaska is widely recommended. In addition to being one of the best bargains in town, it's also an inarguably good place for history buffs.

Walking into the lobby of Hostal La Plata, a quiet family-run pension on the Gran Vía, you are immersed in the wonderful world of Cervantes.

Located between Puerta de Sol and El Museo Prado, the Lisboa is certainly clean and comfortable, thanks to the friendly proprietor.

Colors Hostel is run by a vivacious Argentinean man and is comprised of 9 rooms. Four rooms have balconies that overlook Fuencarral, a trendy street strung with designer clothing shops leading all the way to Chueca.

We like Hostal Asunción for its non-touristy location, plus rates are reasonable for services rendered, and include free Wi-Fi.

Gonzalo won't disappoint for location or facilities. Its low rates never fluctuate, even during high season.

Located in Salamanca north of the center of Madrid on the most fashionable street in the capital is the 17-room, family-run Hostal Salamanca.

The Hostal Cruz-Sol has it all—rock-bottom prices, comfy rooms, and a cool and convenient location. It overlooks the Plaza de Santa Cruz and is just a minute from Puerta del Sol.

Hostal Puerta del Sol is a gay-friendly hostal with a great attitude and an unbeatable perch just above Sol.

In our opinion, the four-star Hotel Meninas is the most tasteful non-chain establishment in Madrid—UN representatives and Gay Pride visitors agree.

The Hostal Persal is an 80-room Madrid classic, where an appealing minimalist aesthetic sets the tone.

This two-star hostal sits directly above Gran Vía, in a building jam-packed with other hostals.