71-73 models are ugly compared to the first gen, after that are the Mustang II models which don't even need discussion. So that leaves you with 69 and 70 models. Personally, I prefer the 69 because it has 4 headlights and the side scoops which makes it look better in my opinion. You've got 4 engine options, 351 C or W (go for the C, it's a better engine), 390 or 428. The 428 will probably be out of your price range. Honesty you'd be fine with any engine, they all get crap mileage and make lots of power.
For one in OK running condition they probably start about $10k. They will probably still need at minimum about $5k worth of work to make them good reliable driving cars since you'll want to redo (and probably upgrade) the brakes and update the engine and exhaust. Keep in mind in this price range cosmetics will be fairly poor. To freshen it up to nice but not show condition you're looking at another $7-10k if you need paint and interior- a good paint job will require stripping the car and run you at minimum $4000, I'd be suspicious of anyone quoting you cheaper. The thing that kills you on these cars is little parts. Tiny trim bits and interior dodads will eventually mostly need replaced or refurbished since the material quality just didn't hold up over 40 years. Annoyingly, they do not make reproductions of some things, which means you're stuck trolling for an original part of suitable quality which isn't cheap. Drivetrain parts are cheap for what they are, they're all parts shared with a ton of other models as used for decades, so there is no problem finding them at good prices.
For a car in good driving and running condition that's already been worked on expect to pay $20-30k+. This is probably the cheaper route to go with, assuming you find a car that had good work done to it. You'll still have to do some minor stuff to it though. The problem with this route is limited choice, the cars for sale will be someone elses' projects or older restorations, you'll find weird things done that don't make sense.
I would recommend you get a project and you do yourself or have the work done for you, so you'll be happy with the car. Otherwise you'll end up slowing chasing down weird little problems that eventually end up with something stupid the previous owner has done.
Now, what to look for. First one is rust. Quarter panels, wheel wells, trunk floor around the gas tank and down inside the fenders, under the windows and the cowl in front of the windshield, the floor pans, and frame rails under the car. Bring a little fridge magnet and test for bondo on the body in these areas. If it's not sticking that means you've got big amounts of bondo or fiberglass which means there was lots of rust repaired the wrong way. Take a big pitcher of water (a gallon would be good) and pour it down the cowl. It should all come out the bottom side of the car fairly quickly. Check the footwells under the dash inside after you pour to make sure none of it leaks inside the car. Also take that time to pull back the carpet in the footwells and make are the floorpans underneath are good. I'd like to see dynamat or some stick down insulation here, but it's not necessary, it just quiets down the road noise. Rust is a sign of poor are or water leaking from under the dash, the good news is welding in a new floor pan is relatively easy and cheap. On the 69 (and I think the 70) the cowl cover is removable if you undo some bolts/screws. If you can talk the seller into pulling it to look inside it's a good idea to do so, cowl replacement is expensive and time consuming, but luckily starting in 69 the cowl unit comes out without removing hundreds of spot welds as on previous years Mustangs. Frame rails should have nothing more than surface rust.
While you have the water handy, pour some on the back windshield and look for leaks inside under the window corners. These are very common, and somewhat annoying to fix, but once done and the glass installed the right way you shouldn't have the problem again. Shake the door windows on a 69 some and run them up and down a couple times, chances are they're wiggly or loose since the glass is only glued in and coming unglued is a common issue. The best way to fix this is a swap to 1970 windows, that involves new plates on the regulator and new glass, but parts are available- the fix runs about $500. Regluing them can be done, but consider it a temporary fix.
On these cars, there's no such thing as "numbers matching" since Ford did not vin stamp component pieces (Note, certain higher up models did have the vin stamps. but not the Mach 1). The best you get is "date code correct" when the engine and transmission are date coded within several weeks before the build date of the car. Don't let a seller blab on about being numbers matching. You can (or the seller already has, ideally) get a deluxe Marty Report on the car for $40. That will tell you what the car was originally built with, and when, it will tell you where the car was shipped to and sold from, as well as confirm it's a real Mach 1.
A note concerning mileage, there is no way to confirm actual mileage unless there is a paper service trail listing mileages over the years. They only have 5 digits on the odometer, so once it hits 100,000 miles it rolls over to 0 again. You could be looking at a freshly restored car with an actual 301,937 miles and it will only show 1,937 on the odometer and the seller might jack up the price saying it's only got 2000 original miles. You need a paper trail to prove these things. That said, if it's been properly taken care of and/or the engine has been worked on, 300,000 miles isn't anything to worry about.
It sounds like a lot to deal with, but it's not really, just remember it's a 40 year old car, check the things that wear out over time and the areas I mentioned. I'm sure I'll chime back in if and when I remember more things to look at. These are great cars, you can't drive them with a big frown and an unhappy mood.
No sense of style. Get the '70. It has a cleaner looking front end, taller rocker panel moldings which help to visually lower the car, and the black panel in between the taillights. It also has the benefit of a standard 351 Cleveland engine, which first appeared in 1970. ('69s had the Windsor.) When I bought my Mustang, my father asked me what it had for an engine. I replied, "351 Cleveland." and my father shocked me by saying that it was a good engine. Now if a diehard Chevy guy says the 351C is a good engine, it's a good engine.
