DNA polymerase θ (Polθ) plays a central role in a DNA double-strand break repair pathway termed theta-mediated end joining (TMEJ). TMEJ functions by pairing short-sequence "microhomologies" (MHs) in single-stranded DNA at each end of a break and subsequently initiating DNA synthesis. It is not known how the Polθ helicase domain (HD) and polymerase domain (PD) operate to bring together MHs and facilitate repair. To resolve these transient processes in real time, we utilized in vitro single-molecule FRET approaches and biochemical analyses. We find that the Polθ-HD mediates the initial capture of two ssDNA strands, bringing them in close proximity. The Polθ-PD binds and stabilizes pre-annealed MHs to form a synaptic complex (SC) and initiate repair synthesis. Individual synthesis reactions show that Polθ is inherently non-processive, accounting for complex mutational patterns during TMEJ. Binding of Polθ-PD to stem-loop-forming sequences can substantially limit synapsis, depending on the available dNTPs and sequence context.