At less than $5 a night, Hotel Chinandega is the best dump in town: centrally located, 15 rooms, relatively clean, and only slightly depressing and dingy.
Hotel Glomar (a block south of the central market, tel. 505/2341-2562) has 13 passable doubles for $17-25; the place is clean enough, a few rooms with air-conditioning.
Similar accommodations are in the Casa Grande (tel. 505/2341-0325, $12–18); there’s free laundry service, and the friendly owner, Don Alvaro, can help organize volcano expeditions.
Hotel El Chinandegano (tel. 505/2341-4800, hotelchdgano [at] turbonett [dot] com [dot] ni, $31) offers 11 rooms with air-conditioning, private bath, breakfast, phone, and Wi-Fi; also laundry, parking, and lovely, bird-filled common spaces.Centrally located 75 meters north of la esquina de los bancos, Hotel Los Balcones (tel. 505/2341-8994, www.hotelbalcones.com [1], $35–45) is another excellent option, offering similar services to its sister hotel of the same name in León.
The plushest digs in the city center are at Hotel Cosigüina (located half a block south of la esquina de los bancos, corner of the banks, tel. 505/2341-3636, $55 plus tax) with air-conditioning, hot water, and private bath. They also rent cars and serve food and drinks in the Fumaroles Restaurant.
Hotel Los Volcanes (Km 129.5, Carretera a Chinandega, tel. 505/2341-1000, $69), has 30 relatively plush rooms with basic business services, located right on the highway, but only two kilometers from the city center.
Links:
[1] http://www.hotelbalcones.com