Akinabalu Youth Hostel is a budget hostel. They offer all the basic amenities with clean and spacious rooms. The central location makes sure that all the attractions are closeby. Breakfast, coffee and tea is complimentary.

Here's the budget chart:

(Source: Akinabalu Youth Hostel)

A couple of reviews:

This is a clean and well-run hostel that provides a good value for the budget minded traveler in a secure and spacious setting. Easily accessible in the heart of Kota Kinabalu, Akinabalu Youth Hostel provides comfortable accommodation with a friendly and knowledgeable staff to assist the novice traveler and the seasoned expatriate.

Akinabalu Youth Hostel (Source: Hostelz.com)

I liked this place: it's not the cheaperst as far as backpacker places go, but it's clean, friendly, offers free internet and coffee, and has a great, large shared area in which you can chill out when it rains, meet other travellers (if you want to) and generally while away time very pleasantly. Staff are friendly, and the location is good, too.

Akinabalu Youth Hostel (Source: TripAdvisor) 

Location: 1st Floor, No. 133 Jalan Gaya, Kota Kinabalu 88000

Tel: 6088-272188

Rates: $6.62 - $21.86. Go here for the bookings.

Borneo Backpackers hostel is centrally located and provides all the basic amenities including 24 hour security. Within close quarters are cafes, restaurants, stores, malls and ferry terminal. They also provide TV and free Wi-Fi and also have an open-air roof top garden. Check here for the tariff chart.

Reviews:

I feel comfortable staying in this hostel. It's located at city center and walking distance to almost everything. Internet access is fast if you use your own laptop. But the PC's at the common area are too slow and maybe need upgrading, cleaning, etc. The linens & rooms were clean

Borneo Backpackers (Kota Kinabalu, Malaysia) (Source: TripAdvisor) 

Overall I enjoyed my stay, great location and helpful staff.

Very nice hostel, great location and very helpfull staff. Would recommend this for sure.

Reviews of Borneo Backpackers (Source: Hostelworld) 

Location: No.24 Lorong Dewan, Kota Kinabalu 88801

Tel: 60 88 234 009

Rates: $6.62 - $16.56 For reservations, check here.

Kinabalu Backpackers Lodge is a relatively new hostel in Sabah. It is located at the heart of the city. Along with all the basic facilities and clean air-conditioned rooms, they also provide free Wi-Fi. Here's a testimonial:

Here are a couple of guest reviews:

We had a great time at the Lodge, we stayed there for about 6 or 7 nights before and after climbing Mount Kinabalu. The hostel is nicely decorated, staff is very friendly and helps you to find your way around town, when I could hardly walk after climbing mount Kinabalu, their staff helped me to carry my luggage up to the room etc.

Kinabalu Backpackers Lodge (Kota Kinabalu, Malaysia) (Source: ripAdvisor) 

They just switched owner early this year. The new owner, BJ, young friendly chap is a Mr. nice guy. A wonderful place to stay in. Everyone there is so friendly, helpful. You will feel so comfortable in this small but clean lodge. Thumbs up!! Will definitely intro this place to anyone!!

Kinabalu Backpackers Lodge - Kota Kinabalu (Source: Yahoo! Travel) 

Location: Lot 4 Lorong Dewan, Sabah, Kota Kinabalu 88000

Tel: 6088 253 385

Rates: $8.80 - $12.33. Click here for booking.

Borneo Gaya Lodge is also centrally located. Facilities include locker and luggage area, 24 hours security, fresh linen whenever needed, a kitchenette, free Wi-Fi and complimentary breakfast. Within 5 to 10 minutes walking distance from the lodge are various restaurants, shopping centers, bus stops, taxi stations and the other attractions.

Reviews:

Well located lodge in heart of Kota Kinabalu. We had room with private bathroom upstairs from the office. Double bed was comfy, sheets and towels clean, hot water all day, wi-fi working well, breakfast included. For our needs to have good night sleep we found this lodge to be the best value in town.

Borneo Gaya Lodge (Kota Kinabalu, Malaysia) (Source: TripAdvisor) 

Borneo Gaya lodge was superior to the other lodges and hostels we checked out in the area. This resulted in us booking additional accomodation. Walter even sent us photos of trip he arranged for us.

Borneo Gaya Lodge, Kota Kinabalu, Malaysia (Source: Travellerspoint) 

Location: 1st Floor, No 78, Jalan Gaya, P.O.BOX 10131, Sabah,, Kota Kinabalu 88801

Tel: 6-088-242477, 6 017-8998812 (Ivy), 6 017-8178765 (Walter)

Rates: $8.28 - $21.52 For booking visit here.