Prep your ingredients by unwrapping the butter, opening your can of condensed milk, and setting them all next to the stove.
Pour the sugar and water into the pot and stir to combine. Place the pot on the stove over medium-high heat.
Stir continuously until the mixture starts to boil, about 5 minutes.
Once it starts boiling, stop stirring. You can swirl the pot a little if the sugar is browning unevenly. If you swirl it too much, sugar will stick to the sides and become chunks later. Watch it carefully so it doesn’t start to burn.
Once the mixture is golden brown, add the butter and stir vigorously until it is completely melted. It will froth a lot.
After the butter is melted, remove from the heat and stir in the sweetened condensed milk. Again, stir vigorously until it is completely combined. It will still be frothy.
Let cool for 5 minutes in the pot, then transfer it to a jar to cool completely. Be careful! Liquid sugar is extremely hot! If you get caramel around the lip, clean off well before closing the lid.
