A beautiful little town at the base of an active volcano. We found private rooms here for five dollars a person at Hotel Regis (http://www.tripadvisor.com/Hotel_Review-g551472-d1468614-Reviews-Hotel_Regis-Masaya_Masaya_Department.html) and there was great street food for how little the town was. 1$ slices of pizza in parque central are a MUST! Probably unlike any pizza you have ever tasted. After dinner stroll towards laguna Masaya to watch lovers walk hand in hand and children play baseball along the malecon.
We would also highly recommend doing a nocturnal tour of Volcan Masaya- you get to see lava! The prices for these tours vary depending on who you do it with. We paid 30$ a person which seems to be about the going rate… it was definitely worth it. They will provide you with headlamps to go explore the lava tubes (which are full of bats!) after the sun sets and then take you to the edge of the crater to see the glow of the lava. This was our favorite town we visited in Nicaragua, muy tranquilo and muy cheap.