In a medium saucepan, melt the butter over medium heat.
Stir in the flour and cook for about 1 minute to create a roux.
Gradually add the milk, whisking constantly to prevent lumps. Continue whisking until the mixture thickens.
Add the shredded cheddar cheese, paprika, garlic powder, onion powder, cayenne pepper (if using), and salt. Stir until the cheese has completely melted and the sauce is smooth.
Remove from heat and serve immediately with nachos or your favorite Tex-Mex dish.
