From the main bus/train station you may take tram line no. 1.
Leave the tram at the fifth station called Drvenija, take a walk across the street to the left side, forward along the street Gimnazijska ulica up to the street Zelenih beretki. Move further toward main chatedral. After you hit the pedestrian street Ferhadija, move toward old city called Baščaršija and search for street Jelica numer 2.
Also you can take a trolley bus line no. 103, which is situated in Dobrinja suburb, some 300m away from the bus station.
Leave the trolley bus at the last station (approx 30-40min ride), go accross the bridge called Latinska ćuprija then move towards Hotel Europe. After hotel turn right and hit th e main pedestrian street Ferhadija. Hostel Balkan is a little bit to the left, on street Jelica 2,across from the Swedish Embassy.