Prepare Your Baking Dish:
Line an 8×8-inch square baking dish with parchment paper. This will make it easier to remove the fudge later. Optionally, grease the parchment paper.

Melt the Base Fudge Ingredients:
In a medium saucepan over low to medium heat, combine the white chocolate chips, sweetened condensed milk, and unsalted butter. Stir constantly until everything melts and becomes smooth. Once melted, remove the saucepan from the heat.

Add Flavorings:
Stir in the vanilla extract and a pinch of salt into the melted fudge mixture to enhance the flavors.

Add the Peppermint Swirl:
Take half of the melted fudge mixture and transfer it to a separate bowl. Add the peppermint extract to the larger portion in the saucepan and stir well.

Color the Peppermint Fudge:
If you want to create the red-and-white swirl effect, add a few drops of red food coloring to the smaller portion of fudge and stir until the color is fully incorporated.

Layer the Fudge:
Pour the white fudge into the prepared baking dish and spread it evenly. Spoon the red peppermint fudge on top and swirl the two mixtures together using a butter knife or skewer to create the desired swirl pattern.

Set the Fudge:
Refrigerate for at least 2 hours, or until the fudge is firm to the touch.

Cut and Serve:
Once set, lift the fudge out of the dish using the parchment paper and cut it into squares.