Masking

At the bottom of the Layers panel, you can add a layer Mask which we'll use for certain techniques.

Lasso tool

You can first select the area to be masked with a Lasso or Marquee tool (good idea to have some feathering so the edge of the selection is softer)...

Then click on the Mask button at the bottom of the Layers panel. This will mask the selection and look like this in the Layers panel...

Brush tool

Get the top photo the size you want with the Scale tool...

Then add a Mask and Brush out the areas you don't want from the top photo...

Your layers will look like this...

With this as the result...

Gradient tool

Make sure the one photo (top one with the mask) is covering some of the other photo. Add a Mask to the top layer.

Then click on the Gradient tool.

...and drag from the inside edge of the top photo onto the other photo as shown below. 

Your Layers will look like this...

The photos look like this...