The effects of initial susceptibility and size polydispersity on magnetic hyperthermia efficiency in two water based ferrofluids containing phosphate and TMAOH coated superparamagnetic Fe3O4 nanoparticles were studied. Experiments were performed at a fixed frequency of 126 kHz on four different concentrations of both samples and under different external field amplitudes. It was observed that for field amplitudes beyond 45.0 kAm−1, the maximum temperature rise was in the vicinity of 42°C (hyperthermia limit) which indicated the suitability of the water based ferrofluids for hyperthermia applications. The maximum temperature rise and specific absorption rate were found to vary linearly with square of the applied field amplitudes, in accordance with theoretical predictions. It was further observed that for a fixed sample concentration, specific absorption rate was higher for the phosphate coated samples which was attributed to the higher initial static susceptibility and lower size polydispersity of phosphate coated Fe3O4.