Melt the butter in a saucepan on medium-low heat, and then cook the onions and peppers for about 5 minutes or until onions are translucent. Add the garlic and cook for another minute.
You can vary which chiles you use to control how hot you want the queso to be. Also, if the sauce is too thick, feel free to add a bit more milk a tablespoon at a time. The key, however, to a smooth sauce is adding the cheese very slowly and not adding any more cheese until the previous addition is completely integrated into the sauce. Lastly, it’s very important to shred your own cheese as pre-shredded has fillers to prevent it from clumping that will also interfere with the queso dip becoming smooth.