The text tool will create text on a new layer. Begin selecting the text tool and then drawing your text box in much the same way the marquee tool is used. It will be easiest to create a new text box/text layer for each line of text you intend to use, as this will allow you better control over the alignment and space between lines. Choose your font, either from the Text menu or the options listed at the top of the window. Remember to choose a font which is appropriate for the image as well as the content of the text. You can change the size of the font using the text options at the top as well. You can convert the text to a path, if you wish to further distort the shape and size of the text. This will make each individual letter into a contained shape. Keep in mind that this can only be undone using the history menu. To convert the text to a path, right-click the layer on which it appears and select “convert to shape”. You can from there choose the direct selection tool to make many different changes to the objects you have created.

Summary:
Use the text tool. Choose your font. Convert to paths.