First I blended the horse with the source image, I did it with a layer mask, a soft brush with very low opacity and a lot of patience...
step 2 of 8
I realiced the horse had a bluish color at the left side so I added a layer adjustment with color fill. I picked a dark brown and set the blending mode to "color".
I also darkened the left part of the mane with the same color and a soft brush.
step 3 of 8
In a new document, I put the wood texture and the paper.
step 4 of 8
step 5 of 8
step 6 of 8
With the scartc brushes I painted the letters and the horse. I picked the color from the background paper and set a low opacity.
step 7 of 8
Now I just put the image of the creased paper on top of everything and set the blending mode to multiply and opacity to 80%