Watch this video from This Old House to learn how to install a door latch.
1 Transfer lockset location from old door to edge of new door.
2 Screw hole-boring template to door for drilling out the lockset holes.
3 Bore the doorknob hole through the face of door using a 2 1/8-inch hole saw; drill halfway through from each side.
4 Use a 1-inch hole saw to bore latch hole in door edge.
5 Unscrew template from door.
6 Set latch into hole, and mark its outline on door edge.
7 Use hammer and chisel to cut a shallow mortise for the latch.
8 Screw latch to door edge
9 Install new lockset in holes in face of door and attach with screws provided.