The proposals are in line with finance minister George Osborne's desire to give the BoE greater oversight of residential mortgage lending to reduce the risk that the housing market could overheat and destabilise Britain's economy.
"The government is proposing that the Bank is granted powers of direction for loan-to-value limits and debt-to-income limits for owner-occupied mortgages," Osborne said in a statement.
The BoE's Financial Policy Committee (FPC) can already recommend limits on how much banks should lend mortgage applicants relative to their income and the value of their home. Both the BoE and the government want to beef up the FPC's powers by making such limits legally enforceable.
With a view to implementing the laws before a general election next May, the consultation will start at once and run to Nov. 28. It is aimed at gathering the views of consumers and the finance industry, particularly on how debt should be defined for the purposes of the new laws, the finance ministry said.
In June, the FPC urged banks to issue no more than 15 percent of mortgages at loan-to-income ratios above 4.5 times a borrower's income.
The FPC also said earlier this month that it wants the power to impose limits on buy-to-let mortgages.
But the government said on Thursday that this would be subject to a separate consultation in 2015 aimed at "building an in-depth evidence base on how the operation of the UK buy-to-let housing market may carry risks to financial stability".
The decision to push back the buy-to-let consultation means it is unlikely that there will be sufficient time to enact any new laws on that subject through before the 2015 election.
(Reporting by William James and David Milliken; Editing by Toby Chopra)