First lay your hand towel on the wrong side of your fabric and pin it in place. Cut leaving about 1 inch extra all around the towel, this is so you can fold it over twice and stitch around.
Sorry I didn't get any pictures during the process of making this one. I had approximately 10 minutes to start and finish it before little man woke up from a nap, so no time for step by step pictures. Hopefully you will be able to tell from the finished product how to do it.
Here is how the fabric should look when it's folded and stitched around the edges.
Here is the finished product. For this changing pad I used some leftover terry cloth fabric I had on hand and used a hand towel to measure it for sizing.