Touch and hold the Home Screen background until the apps start to jiggle. To make a folder, drag one app onto another. You can then add more apps to the folder by dragging them into it. If you want to change the folder’s name, touch and hold it, select Rename, and then type in the new name.
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iPhone Jiggle
Touch and hold the home screen background until all of the apps are “jiggling”.
Once this happens you are able to make edits, in particular the ability to create a folder.

Drag An App
While the apps are stilling jiggling, drag one app on top of another app.
This will automatically create a new folder that is named the same as the app you added.
At this point, if you want to change the name of the folder, just tap on the name and make a change.

To add more apps to the folder, touch anywhere outside of the folder. Drag another app into the folder.
To remove an app, get the apps to jiggle again, then drag it out of the folder.