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1 • Open the template file and the photo you would like to insert.
2 • Minimize the photo; we'll use it later. Go to the template and select the "photo layer" in the layers palette. (I try to make sure that all of my templates' layers are labeled and have a "photo layer.")
*If you have Photoshop Elements, skip steps 3-6, and move on to step 7 now.*
3 • Use the magic wand to select the photo layer. (You can also Ctrl+Click on the layer thumbnail in the layers palette.)
4 • Now, bring your photo back up. Press Ctrl+A to Select All, and then Ctrl+C to Copy.
5 • Now, go back to the template (with the "photo layer" still selected) and press Shift+Ctrl+V to "paste into."
6 • Notice that the photo will probably be the wrong size for the opening in the template. Press Ctrl+T to get the transform controls. Then, resize the image so that it fits into the opening. (Hold down Shift to maintain proportions while you resize, and press Enter when you are done resizing.) Congrats! You just inserted a photo using a clipping mask.
*The following steps can be used for either full version Photoshop or Photoshop Elements.*
7 • Now, bring your photo back up, and use your move tool to drag it into the template. If you have trouble doing this, you can also do this: While you're on the photo, press Ctrl+A to Select All, and Ctrl+C to Copy. Then go back to the template and press Ctrl+V to Paste.
**Regardless of which method you use to get the photo over to the template, make sure that the photo is directly above the "photo layer" in the layers palette!
8 • Notice that (in this case) the photo is much to large for the template. Now we'll do just a little resizing to help the photo fit into the template better. Press Ctrl+T to get the transform controls. Then, resize the image so that it fits into the opening. Hold down Shift to maintain proportions while you resize, and press Enter when you are done resizing.
9 • Now, I couldn't get a good screen shot of this last step, but here is what to do. Hold down Alt and hover your mouse in between the "photo layer" and the photo in your layers palette. Watch for an icon like this to appear:
10 • When this icon appears, and only when it appears, simply click. This will create a clipping mask from the template's "photo layer" so that your photo will only show through the window it was intended to. Now your photo should look like this in the template.