20-Day Epic Iceland Budget Backpacking Route
Iceland is often perceived as an elite, expensive destination, but for the savvy backpacker, it is a playground of free natural wonders. By utilizing the national bus system (Strætó), staying in high-quality hostels, and mastering the art of the 'Bónus' grocery run, you can experience the full majesty of the Ring Road and beyond for a fraction of the typical cost.
This 20-day journey takes you from the vibrant streets of Reykjavik to the dramatic cliffs of the Westfjords and the volcanic landscapes of the North. You will trade luxury hotels for communal kitchens and expensive tours for scenic hikes, proving that the best things in Iceland—the midnight sun, the Northern Lights, and the roaring waterfalls—are completely free.
The Itinerary
Day 1: Reykjavik - Arrival & Settling In
Keflavík Airport Arrival
Land at KEF and grab your bags. Skip the expensive private taxis and look for the Flybus or the public Bus 55 to reach the city center efficiently.
Hostel Check-in
Drop your bags at a central hostel like Kex or Loft. These spots offer great communal vibes and are perfect for meeting fellow budget travelers.
Bónus Grocery Run
Head to the Bónus supermarket (look for the yellow pig) to stock up on Skyr, bread, and pasta. Cooking your own meals is the #1 way to save money here.
Sun Voyager Sculpture
Walk along the waterfront to see this iconic steel sculpture. It is completely free and offers a stunning view of Mount Esja across the bay.
Day 2: Reykjavik - Culture & Harbor Views
Free City Walking Tour
Join a tip-based walking tour to learn about Iceland's history, from Vikings to the modern era. It starts near the Parliament building.
Harpa Concert Hall
Explore the architecture of this glass marvel. You can walk through the lobby and public areas for free to admire the honeycomb windows.
Hallgrímskirkja Exterior
Visit the most famous church in Iceland. While there is a fee to go up the tower, admiring the basalt-column-inspired facade from the outside is free.
Bæjarins Beztu Pylsur
Eat at the world-famous hot dog stand. At about $5 USD, it is the cheapest 'dining out' experience in the capital.
Day 3: Golden Circle - The Classic Loop
Þingvellir National Park
Walk between the tectonic plates of North America and Eurasia. This UNESCO site is free to enter (parking/bus fees apply).
Geysir Geothermal Area
Watch Strokkur erupt every 6-10 minutes. It's a spectacular natural show that costs nothing to witness.
Gullfoss Waterfall
Marvel at the 'Golden Falls' where the Hvita river drops into a deep canyon. The spray and rainbows are legendary.
Kerið Crater
A minor entrance fee applies here, but the volcanic crater lake's vivid red soil and turquoise water are worth the small change.
Day 4: South Coast - Waterfalls & Basalt
Bus 51 to Seljalandsfoss
Board the Strætó regional bus toward Vík. Hop off at Seljalandsfoss to walk behind the falling curtain of water.
Skógafoss Hike
Walk the stairs next to this massive 60m drop. It’s the starting point for the Fimmvörðuháls trail.
Skogar Museum (Exterior)
View the traditional turf houses from the outside for a free glimpse into Iceland's architectural past.
Arrive in Vík
Check into the Vík HI Hostel. Cook a hearty dinner using supplies bought back in Reykjavik.
Day 5: Vík - Black Sands & Puffins
Reynisfjara Beach
Walk on the world-famous black sand. Admire the Reynisdrangar basalt sea stacks rising from the ocean.
Dyrhólaey Cliffs
Hike up for a panoramic view of the coastline. In summer, this is a prime spot to see puffins nesting for free.
Vík i Myrdal Church
The white church with a red roof provides the best photo op of the village and the sea.
Black Crust Pizza
Splurge slightly on a single pizza slice here—the volcanic-dough crust is a local specialty.
Day 6: Skaftafell - Glacier Hiking
Skaftafell Transit
Take the morning bus further east to the Skaftafell wilderness area, part of Vatnajökull National Park.
Svartifoss Hike
A free 1.5-hour round-trip hike leads to the 'Black Fall,' framed by dramatic hanging basalt columns.
Skaftafellsjökull Viewpoint
Walk the flat path to the glacier's edge to see the blue ice melting into the lagoon.
Camp or Hostel Skaftafell
Stay at the national park campsite to save maximum Krona while staying in the heart of nature.
Day 7: Jökulsárlón - Icebergs & Diamonds
Jökulsárlón Glacier Lagoon
Watch massive icebergs break off the glacier and float toward the sea. It's a free natural spectacle and great for spotting seals.
Diamond Beach
Cross the road to see the ice chunks washed up on the black sand, looking like giant diamonds.
Fjallsárlón Lagoon
Visit the smaller, quieter neighbor lagoon for a more peaceful experience without the crowds.
Travel to Höfn
Catch the late bus to the fishing town of Höfn, the lobster capital of Iceland.
Day 8: Höfn - Mountains & Marshes
Vestrahorn Viewpoint
Walk toward the Stokksnes peninsula to see the jagged peaks of Vestrahorn reflecting in the tidal flats.
Höfn Harbor Walk
Watch the fishing boats come in. It’s a great way to experience local life without spending a dime.
Ósland Conservation Area
A great spot for birdwatching and coastal views right on the edge of the town.
Local Grocery Dinner
Visit Netto for fresh local bread and smoked lamb slices (Hangikjöt) for a budget sandwich feast.
Day 9: East Fjords - The Scenic Route
Bus to Egilsstaðir
This is a long, winding journey through the fjords. Keep your camera ready as the bus passes through narrow coastal roads.
Egilsstaðir Arrival
The main hub of the East. Check into the local campsite or hostel and stretch your legs by Lake Lagarfljót.
Fardagafoss Hike
A short hike from town leads to this waterfall which features a small cave behind the falls.
Hengifoss (Optional Bus/Hitch)
If you can find a ride, Iceland's third-tallest waterfall with red clay layers is a must-see in the area.
Day 10: Seyðisfjörður - Art & Fjords
Mountain Pass to Seyðisfjörður
Take the local bus over the Fjarðarheiði pass. The views of the valley below are breathtaking.
Rainbow Street
Walk the famous painted road leading to the blue church (Seyðisfjarðarkirkja). It is the most photographed spot in the East.
Tvisongur Sound Sculpture
Hike 15 minutes up the hill to these concrete domes that amplify the sound of the wind and voices.
Fjord-side Picnic
Buy some local fish at the market and enjoy a picnic by the water as the ferry from Denmark arrives.
Day 11: Mývatn - Geothermal Wonders
Bus to Mývatn
Head north toward the volcanic Lake Mývatn area. This region feels like another planet.
Hverir Mud Pools
Explore the steaming vents and boiling mud of Námaskarð. It smells like sulfur, but the colors are incredible.
Viti Crater
Hike around the rim of this turquoise-filled crater in the Krafla volcanic fissure zone.
Reykjahlíð Village
Settle into a campsite or guesthouse in the main village of the lake area.
Day 12: Mývatn - Lava Labyrinths
Dimmuborgir
Walk through the 'Dark Castles,' a field of massive, oddly shaped lava formations and caves.
Grjótagjá Cave
Visit the lava cave with an underground hot spring made famous by Game of Thrones (no swimming allowed).
Hverfjall Crater Hike
Climb the steep path to the rim of this massive tephra cone for 360-degree views of the lake.
Skútustaðagígar
Walk among the pseudocraters formed by steam explosions when lava flowed over the wetlands.
Day 13: Akureyri - Capital of the North
Goðafoss Waterfall
On the bus route to Akureyri, stop at the 'Waterfall of the Gods,' where Iceland's conversion to Christianity was finalized.
Akureyri Botanical Garden
Visit one of the northernmost botanical gardens in the world. Entry is free and it's an oasis of calm.
Akureyrarkirkja
Climb the steps to the city’s landmark church designed by the same architect as Hallgrímskirkja.
Free City Bus
Take advantage of Akureyri’s free municipal bus system to explore the outskirts of the town.
Day 14: Akureyri - Culture & Relaxation
Art Museum & Street Art
Walk along the 'Art Street' (Kaupvangsstræti) to see local galleries and murals.
Eyjafjörður Fjord Walk
Walk the path along the fjord for a chance to see whales breaching in the distance from the shore.
Akureyri Swimming Pool
Join the locals at the public pool. It’s cheap, heated, and features great waterslides and hot tubs.
Brynja Ice Cream
Try the local favorite ice cream. It's a staple in Akureyri, even in the middle of winter.
Day 15: Westfjords - Heading Into the Wild
Northwest Transit
Take the bus toward Hólmavík. The Westfjords are remote, so this journey requires careful planning of connections.
Museum of Icelandic Sorcery
Located in Hólmavík, this quirky museum offers a fascinating look at local folklore (entrance fee required).
Hólmavík Harbor
A quiet, authentic fishing village perfect for a restful evening before the rugged roads ahead.
Hostel Night
Stay at the local Steinhús Guesthouse or similar to meet other travelers venturing off the beaten path.
Day 16: Ísafjörður - The Northern Fjords
Bus to Ísafjörður
Travel through some of the most dramatic landscapes in Iceland to reach the capital of the Westfjords.
Maritime Museum Exterior
See the oldest houses in Iceland, built in the 18th century by merchants.
Naustahvilft (Troll’s Seat) Hike
A steep but short hike to a flat mountain depression with incredible views over the fjord.
Local Fish & Chips
Visit the local harbor for fresh-caught fish at a fraction of Reykjavik restaurant prices.
Day 17: Dynjandi - The Jewel of the Westfjords
Dynjandi Waterfall Trip
Use a local shuttle or ride-share to reach this massive tiered waterfall. It’s often called the most beautiful in Iceland.
Lower Falls Exploration
There are actually seven waterfalls at the site. Take your time hiking up to the largest one at the top.
Arnafjörður Views
Enjoy the drive back through the deep fjords, keeping an eye out for seals on the rocks.
Ísafjörður Public Library
Housed in a beautiful old building, it's a great free place to relax and use the internet.
Day 18: Snaefellsnes - Iceland in Miniature
Baldur Ferry
Take the ferry from Brjánslækur to Stykkishólmur. It's a scenic way to cross Breiðafjörður bay.
Stykkishólmur Harbor
Explore this charming town. Climb Súgandisey cliff for a view of the lighthouse and islands.
Kirkjufell Mountain
Take the bus to Grundarfjörður to see the most photographed mountain in Iceland and its accompanying waterfall.
Hostel Grundarfjörður
Stay locally to catch the sunset (or Northern Lights) over the iconic peak.
Day 19: Snaefellsnes to Reykjavik
Djúpalónssandur Beach
Explore the rusted remains of a shipwreck and try your hand at the 'lifting stones' used by fishermen.
Arnarstapi Coastal Walk
A free hike between Arnarstapi and Hellnar featuring stone arches and basalt cliffs.
Return to Reykjavik
Catch the bus back to the capital for your final evening in the city.
Laugavegur Window Shopping
Enjoy the vibrant atmosphere of the main street and perhaps grab a final budget hot dog.
Day 20: Departure - Geothermal Goodbyes
Nauthólsvík Geothermal Beach
Relax at this man-made beach where hot water is pumped into the ocean. Admission is free in the summer months.
Perlan Viewpoint
Walk around the grounds of Perlan for a final elevated view of the city and the airport in the distance.
Duty-Free Shopping
Pick up some Icelandic chocolate or salts at the airport to use up your remaining Krona before your flight.
Departure
Board your flight home with a memory bank full of volcanic landscapes and glacier views.
Best Time to Visit Iceland
For budget backpackers, the shoulder seasons of May, June, and September offer the best balance of manageable prices and enough daylight to explore. Summer (July-August) has the best weather and the Midnight Sun, but hostel prices peak and buses can be crowded. Winter is the cheapest time to visit and the best for Northern Lights, but many regional buses in the Westfjords and North cease operations, making budget travel much harder.
Currency & Money
The local currency is the Icelandic Króna (ISK). Iceland is nearly 100% cashless; you can pay for everything from a hot dog to a bus ride with a debit or credit card. Tipping is not expected and is already included in service charges. To save money, always select 'Pay in ISK' on card machines to get the best exchange rate from your home bank.
Getting Around Iceland
While most tourists rent cars, the Strætó (public bus) network connects major towns and attractions along the Ring Road. For a 20-day trip, a combination of Strætó buses and occasional regional shuttles is the most budget-friendly method. Note that there are no trains in Iceland. For remote areas like the Westfjords, hitchhiking is common and generally considered safe, or you can use ride-sharing websites like Samferda.is to split gas costs with locals.
