Microhomology-mediated end joining (MMEJ) anneals short, imperfect microhomologies flanking DNA breaks, producing repair products with deletions in a Ku- and RAD52-independent fashion. Puzzlingly, MMEJ preferentially selects certain microhomologies over others, even when multiple microhomologies are available. To define rules and parameters for microhomology selection, we altered the length, the position, and the level of mismatches to the microhomologies flanking homothallic switching (HO) endonuclease-induced breaks and assessed their effect on MMEJ frequency and the types of repair product formation. We found that microhomology of eight to 20 base pairs carrying no more than 20% mismatches efficiently induced MMEJ. Deletion of MSH6 did not impact MMEJ frequency. MMEJ preferentially chose a microhomology pair that was more proximal from the break. Interestingly, MMEJ events preferentially retained the centromere proximal side of the HO break, while the sequences proximal to the telomere were frequently deleted. The asymmetry in the deletional profile among MMEJ products was reduced when HO was induced on the circular chromosome. The results provide insight into how cells search and select microhomologies for MMEJ in budding yeast.