It’s a buyer’s market — if you’re the right kind of buyer.

As Rhode Island’s house prices fall to their lowest level in five years, people are finding their dream houses on the market for tens of thousands of dollars less than they were just a year ago.

But as they go searching for mortgages, they’re also finding that the skittish banking industry is far more selective about who they loan money to, scrutinizing borrowers’ finances more closely than years past. Still, if you make the grade, you can make out.

So who is buying?

Christopher Bergantine, of Coventry, has his mother in Florida to thank for helping him take advantage of a “great deal” on a house in town.

Last summer, the raised ranch on Jefferson Drive that he and his wife had initially dismissed as too pricey was marked down to $240,000 –– $135,000 less than the list price in May of 2007.

The broker listing described it as “custom built” with 2,500 square feet of living space, central air conditioning, a Jacuzzi, recreation room and wet bar. The house was spacious enough to fit their household of eight: he and his wife, four kids, his mother-in-law, and an uncle who lived with them.

The 30-year-old technician for a communications company had signed a purchase-and-sales agreement and was scheduled to close in August.

His wife, Cheryl Bertrand, 32, works for the Community College of Rhode Island. Their household income, before taxes, was about $80,000 last year.

But Cheryl’s credit was wrecked. After divorcing her first husband, she’d lost her house in a “short sale” and did not qualify for a mortgage. (A short sale happens when the bank sells the house for less than what’s owed on the mortgage.) For six weeks they lived with a friend.

Christopher would have to buy the house on his own.

Last August, the day before the closing on the Jefferson Drive house, their mortgage broker called with bad news. The mortgage company wouldn’t approve the loan because Christopher didn’t have sufficient assets. Is there anyone — a relative maybe — who could co-sign it?

Lending rules for the type of government-backed mortgage he was seeking permit a “non-occupant co-borrower” to co-sign the mortgage, a practice that has become more common lately as lenders have tightened underwriting guidelines, said the family’s broker, Jeremy G. Cohen, of Complete Mortgage Co. in Cranston.

Two or three years ago, buyers could finance 100 percent of the cost of their house, Cohen said, with virtually no verification of their income or assets.

“You were able to manipulate those applications based on credit,” he said. “[Now,] if you can’t afford it, you’re not getting a loan, plain and simple.”’

Christopher called his mother in Florida.

Barbara Lecuyer is 57 and retired. She collects a pension from the telephone company where she worked for three decades. She also has money in an individual retirement account (IRA) and she owns her own house. She was happy to help out her son.

“It’s a beautiful house,” she said.

If her son defaults on the mortgage, she knows she’d be on the hook. But Lecuyer says she isn’t worried. Her son has always had a steady job, she said.

Lecuyer says she misses her children and grandchildren and would like to move back to Rhode Island, but first she’d have to sell her house in Florida. And the way the market is now, she said, that’s unlikely to happen anytime soon.

The market downturn has also spurred some unusual cooperation among buyers and sellers.

Take the case of Kathleen and Jerry Blanchet, a couple in their 50s.

They weren’t looking to sell their house or buy a new one. But last spring a house in Smithfield with a stone exterior went on the market. It was 4½ miles away from where they lived in North Smithfield. He’s an electrical lineman, she’s in medical billing and they have good credit.

When the couple toured the Smithfield house, they loved it. The asking price: $315,900.

Two weeks later the Blanchets offered to buy it for the full listing price. They knew the seller had already lowered the price because it needed a new septic system. Their offer included a stipulation that the seller put in the new septic system, Kathleen said. The sale was also contingent on the Blanchets selling their house.

Their home went on the market for $269,000. It sat there for 130 days before getting an offer. When an offer came in, it was much lower than what the Blanchets had hoped.

Meanwhile, the sellers in Smithfield had no offers on their home. So when they learned that the Blanchets were having trouble finding a buyer, too, they agreed to take a lower price. “They felt it was to their benefit to come down,” Kathleen said.

In the end, the Blanchets sold their house for $240,000 ($29,000 less than their initial asking price) and bought their new house for $285,000 ($30,900 less than the original list price.)

The Blanchets were able to trade up, in part, because they had excellent credit scores which helped them secure their 15-year mortgage

Joel Trojan paid $1.28 million cash in September for two rental houses on waterfront property in Barrington.

That’s $137,000 less than the property sold for five years ago.

“The land is worth more than what I bought the property for,” Trojan said.

The chief executive of Century Drywall in Lincoln didn’t need to bother with a mortgage. A month earlier, he’d sold the house he built for his family on four acres in Lincoln to the New England Patriots’ wide receiver Randy Moss for $1.3 million. It wasn’t what Trojan would describe as a bargain. Moss paid his asking price. The only negotiation, he said, was over some minor design changes.

“He didn’t talk much,” Trojan said, but “I could tell he liked it.”

Trojan, 42, hadn’t planned to sell his house in Lincoln. But the deal on the waterfront property in Barrington, he said, was too good to pass up. The property had been on the market for three years. The list price in December 2005 was $1.75 million. That’s $50,000 more than Trojan paid for it.

After the rental leases on the houses at 10 and 12 Payne Rd. in Barrington expire in August, Trojan said, he plans to tear down the bigger of the two houses and build a Mediterranean-style house with a water view.

“We’ve seen [more] knock-downs,” said David Coleman, owner of Coleman Realtors in Barrington. This year and last year, two houses near the water, on Rumstick Point and Nayatt Point, sold for $2.7 million each, he said. “And both got knocked down.”

Paul Zarrella, a real estate investor, is profiting from the housing market downturn, buying suburban houses on the cheap, making renovations and selling them for profits in the thousands.

In August, Zarella’s firm, Sunshine Development of East Greenwich, bought a Colonial-style house at 22 Capeway Rd. in Warwick for $125,000. A year earlier city records showed the house was assessed at $255,600.

The 1,900-square foot house needed a new kitchen, a new electrical system and a new roof. But the moment he walked in, Zarrrella said, he knew he would buy it, envisioning cherry-wood cabinets, stainless-steel appliances and hardwood floors.

He financed the purchase with a loan from “private investors,” paying 3 points to get an interest rate of 14 percent. Then he and his crews went to work, seven days a week.

If Zarella doesn’t resell his properties quickly, he loses money. The interest on his loan is a ticking clock

His crews finished the house in five weeks. The house went up for sale for $229,900 — $105,000 more than he paid for it two months earlier.

Last month he got a buyer willing to pay the asking price “minus some closing costs.”

“Counting overhead, commissions and carrying costs, I’ll probably make twenty-five grand when it’s all said and done,” he said.

Three of the last four houses he’s bought have sold within a week of going on the market. Those are all money-makers. The fourth has been on the market for nine months and he’ll probably lose money on it.

“I’d love to do 12 [houses] a year,” he said, “but the cash is tight now.”

Zarella, who offers real-estate tips on his Saturday morning radio show (Rhode Island Real Estate Insiders on 790-AM,) said that even though prices continue to fall he’s confident the market has already hit bottom. At these prices, he said, “How can you lose…?”

Real estate agent Heidi Farmer Piccerelli of Barrington, had a front-row seat to one couple’s emotional rollercoaster ride of trying to sell their house in this market.

In September she picked up a listing of a four-bedroom Barrington Colonial assessed for $510,000. The 2,600-square-foot house had been on the market with a previous realtor since March without selling. The couple, looking to downsize now that their children had grown, had set an original asking price of $529,000.

It sold this month for $400,000.

“When it was on the market for a different agency, they had three offers a lot higher that they didn’t take which they fully regret now,” says Piccerelli. “If they had priced it right to begin with, they would have gotten a great price for that house.”

The original price was simply unrealistic in this year’s market, said Piccerelli.

“You have to be completely honest and up front with the seller” about the real current market value of their property, Piccerelli says. “If you’re not on the same page it’s not worth your time or their time.”

That is harder for some sellers to accept than others.

“We have become counselors more than anything,” says Piccerelli. “I think we’re doing a lot of hand holding right now.”

Lisa Walker, a Century 21 realtor in North Attleboro, says she often goes into meetings with prospective homeowners armed with paperwork: comparable recent sales, appraisals, property assessments.

“If you go in and show them the comparison properties, and then say, ‘I’m looking at this, and the buyers are looking at this and the appraiser will be looking at this, then they can’t deny it.’ ”

Those black and white pages are a realtor’s best defense against wishful thinking and wasting everyone’s time.

Yet, Walker says, in some communities like Pawtucket, the high number of foreclosures and short sales is making it harder for realtors and appraisers to find comparable sales to use as gauges.

“You have to price it right because the longer it’s on the market the less bargaining power you have. If they [the buyers] know you have had it on the market for 60 days, they aren’t going to offer you the asking price.”

Walker says she politely declines offers from sellers with inflated expectations.

“I won’t do it anymore,” she says. “There was a time when there was a lot of overpricing but not anymore. I won’t do it and I’m finding more Realtors are feeling the same way.’

—With reports by staff writer Kate Bramson