1. Go to Layout -> open the Header widget -> click on "Choose File".
2. Upload your image, but do not click on "Shrink to fit".
3. Select "Instead of title and description" from the placement options.
4. If you want to add a description under your blog title, add it to the Description box and select "Have description placed after the image" from the placement options.
TIP: You can change the size of the header image from Theme > Customize > Advanced > Blog Header.