That is very bad rot ,i would be expecting much more than what you can see .Frame rail replacement will not be cheap as it is not as easy as simple sheet metal replacement .I would also inspect the floors in the surrounding area ,i am betting there is much more .It looks like the rear torque boxes are also gone and i would be worried about the rockers they attach to .Lift the bottom of the back seat and inspect the seat floor .Look at the bottoms of the rear quarters and trunk drop offs from the inside also .
We had a 66 convert in our shop and we could not let the owner drive it away because it wasn't safe to drive ,it was so rotten latching the top made it where the doors wouldn't open .The owner had it trailerd to his home where i heard it finally folded up through the rockers . Don't make a quick buy inspect it very well or have someone that knows about Mustangs inspect it ,it may save you some real headaches later .